Case No: CO/5995/2016
Neutral Citation Number: [2017] EWHC 2308 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 15/09/2017

Before :

MR JUSTICE DOVE

- - - - - - - - - - - - - - - - - - - - -

Between :

	The Queen (on the application of) The Underwritten Warranty Company Limited t/a The Insurance Backed Guarantee Company 	First Claimant	
	- and -		
	The Double Glazing & Conservatory Quality Assurance Ombudsman Scheme	Second Claimant	
	- and -		
	FENSA LTD	Defendant	
	- and -		
	Network VEKA LTD	First Interested Party	
	- and -		
	Price Bailey Insurance PCC LTD t/a Safeworld Insurance Group	Second Interested Party	
	- and -		
	The Secretary of State for Communities and Local Government	Third Interested Party	
	- and -		
	United Kingdom Accreditation Service	Fourth Interested Party 	

- - - - - - - - - - - - - - - - - - - - -

Tim Ward QC (instructed by Davis Blank Furniss) for the Claimant
Jamie Burton (instructed by Wedlake Bell) for the Defendant
David Manknell (instructed by the Government Legal Department) for the Third Interested Party

Hearing dates: 29th June 2017 & 21st July 2017

- - - - - - - - - - - - - - - - - - - - -

Judgment
Mr Justice Dove : 
Introduction
1.	The first claimant, the Underwritten Warranty Company LTD (“UWC”) are insurance brokers specialising in the provision of insurance backed guarantees (“IBGs”) which are required for a regulatory scheme in relation to self-certification under the Building Regulations 2010 (“the 2010 Regulations”). The second claimant is its parent company. It offers consumer protection to customers of its members, including accreditation of those members, together with schemes of mediation and ombudsman services, as part of the aftercare following the installation of replacement windows, doors and other forms of glazing within existing dwellings. 
2.	The defendant, FENSA, is authorised by the third interested party, the Secretary of State for Communities and Local Government, to operate a Competent Persons Scheme (a “CPS”) under the 2010 Regulations. The CPS is also part and parcel of the scheme of regulation for self certification under the 2010 Regulations. 
3.	This regulatory scheme, in brief, is as follows. The power to make building regulations in relation to a range of issues including the design and construction of buildings, demolition of buildings and the services, fittings and equipment provided in or in connection with buildings is given to the third interested party by section 1 of the Buildings Act 1984. Paragraph 4A of Schedule 1 of the 1984 Act provides as follows:
“A(1)Building regulations may—

(a)provide for requiring that, in prescribed circumstances, a person of a prescribed class or description is to give to a local authority or an approved inspector a certificate to the effect that the requirements of building regulations as to matters of a prescribed description are satisfied;
(b)provide for requiring that such certificates be given within such periods or at such times and in such forms as may be prescribed;
(c)provide that a local authority or an approved inspector is not to exercise or perform a prescribed power or duty unless—
(i)such a certificate has been given to them or him; or
(ii)such a certificate has been given to them or him and the certificate has been accepted by them or him;
(d)make provision as to—
(i)the acceptance of such certificates by local authorities and approved inspectors; and
(ii)other steps to be taken by local authorities or approved inspectors in connection with such certificates.
(2)Building regulations may provide for such certificates to be treated as evidence (but not conclusive evidence) of the matters certified.”
4.	Regulation 20 of the 2010 Regulations makes provisions in relation to self certification schemes in the following terms:
“20.—(1) This regulation applies to the extent that the building work consists only of work of a type described in column 1 of the Table in Schedule 3 and the work is carried out by a person who is described in the corresponding entry in column 2 of that Table in respect of that type of work.
(2) Where this regulation applies, the local authority are authorised to accept, as evidence that the requirements of regulations 4 and 7 have been satisfied, a certificate to that effect by the person carrying out the work.”
5.	Schedule 3 of the 2010 Regulations contains details of self certification schemes identifying the type of work which is covered by the scheme and the identity of a person who is entitled to carry out that work and have the benefit of the self certification regime. In particular, as applies in the present case, schemes 10 and 11 are specified as follows:
Column 1	Column 2	
Type of Work	Person carrying out work	
10.  Installation, as a replacement, of a window, rooflight, roof window or door in an existing dwelling 
	A person registered in respect of that type of work by BM Trada Certification Limited, […] Certsure LLP, by Fensa Limited under the Fenestration Self-Assessment Scheme, by NAPIT Registration Limited, Network VEKA Limited, or Stroma Certification Limited.	
11.  Installation, as a replacement, of a window, rooflight, roof window or door in an existing building other than a dwelling. This paragraph does not apply to glass which is load bearing or structural or which forms part of glazed curtain walling or a revolving door.
	A person registered in respect of that type of work by BM Trada Certification Limited, Blue Flame Certification Limited, CERTASS Limited, Certsure LLP, by Fensa Limited under the Fenestration Scheme, by NAPIT Registration Limited, Network VEKA Limited, or Stroma Certification Limited	

6.	It will be noted that the defendant is specifically identified in relation to schemes 10 and 11 as operators of a scheme, which is their CPS.
7.	The third interested party has issued, in April 2016, Conditions of Authorisations in relation to competent person self-certification schemes under the Building Regulations. Under condition 1 of those Conditions of Authorisations the fourth interested party, the United Kingdom Accreditation Service (“UKAS”) is provided with the specific role of operating a scheme of accreditation which each CPS has to achieve. UKAS is charged with the initial assessment of any scheme submitted to it for endorsement as a CPS and thereafter required to reassess each scheme annually to ensure that the Conditions of Authorisations are being met. As the third interested party explained both in evidence and submissions, UKAS is responsible for monitoring compliance with the Conditions of Authorisations on behalf of the third interested party. Conditions 5 and 17 of the Conditions of Authorisations are relevant to the present proceedings and provide as follows:
Conditions of Authorisations
	Notes on how to demonstrate meeting the conditions	
5. 
Scheme operator to have an absence of, or methods for avoiding, conflicts of interest between the commercial interests of any sponsoring or parent organisations and management of the scheme. 
	The scheme operator shall document how any conflicts of interest will be managed and demonstrate how risks to impartiality can be minimised or eliminated, as required by ISO/IEC 17065:2012 sections 4.2 and 5.2. 
For example: possible conflicts of interest may arise where a scheme is part of or owned by a larger commercial, trade or professional body. 
Where a parent or subsidiary company provides financial protection for scheme registrants, this may be acceptable provided there is no conflict of interest with the certification activities performed by the scheme operator. 	
17. 
Scheme operator to ensure consumers are provided with appropriate financial protection to put work to dwellings right, which is non-compliant with the Building Regulations, where the original installer cannot do so (because they are no longer trading). 
	Financial protection must be provided for a minimum of six years from the date of completion for work to dwellings, except where the client is a local authority or housing association in which case financial protection does not need to be provided but must be offered. Financial protection does not need to be offered or provided for work to buildings other than dwellings. 
No protection is needed where scheme registrants are sub-contractors and the main contractors’ liabilities cover the requirements of this condition, for example new house warranties. 
Possible mechanisms include guarantees, insurance-backed warranties or, where appropriate, professional indemnity insurance. 
Financial protection will be deemed appropriate if: 
(a) the fund supporting it is of a size commensurate with the risks involved; and 
(b) the consumer has direct access to it even if the scheme operator is no longer running a scheme. 
Where a manufacturer’s product guarantee is for a shorter period than six years, this period will take precedence for that product. 	

8.	In order to meet the requirements of condition 17 of the Conditions of Authorisations the defendant maintains a list of IBG providers. In or around July 2014 the defendant recognised the IBG issued by UWC and approved it for use by members of the defendant operating within their CPS. On 23rd July 2014 the terms of the agreement between UWC and the defendant were set out in correspondence. Subsequently a further written notification of the terms of the agreement between UWC and the defendant for UWC’s appointment as an approved insurance provider pursuant to the defendant’s CPS was provided in a letter dated 27th August 2015. The confirmation of the terms of the agreement was provided by UWC countersigning the letter of 27th August 2015 on 5th September 2015. Pertinent terms of that contract for the purposes of these proceedings are as follows:
“We are writing to set out the terms agreed between us relating to your appointment as an approved insurance provider (“Approved Insurance Provider”) in respect of the issuance by you of Insurance Backed Guarantees (“IBG”) in relation to Installations carried out by FENSA Registered Businesses under the FENSA Competent Person Scheme.
Your appointment by us as an Approved Insurance Provider is subject to the following terms and conditions…
3.2 You shall, save as referred to below, provide to us not less than 30 days’ written notice in advance of any proposed amendments to the terms and conditions of the IBG and shall consult with us in relation to the same. Where any proposed changes to the terms and conditions of the IBG are required in order to comply with any applicable laws or regulations or directions of any competent authority, you shall provide written notice as soon as reasonably practicable. If we object to any proposed amendments to the terms and conditions of the IBG (other than those required to comply with any applicable laws or regulations or directions of any competent authority), we shall be entitled to terminate this Agreement by giving not less than 7 days’ written notice to you at any time after having been informed of any such changes…
4.7 You agree that you will ensure that each IBG issued by you shall be a protected contract of insurance for the purposes of the UK Financial Services Compensation Scheme and shall be covered by the Financial Ombudsman Service (whether pursuant to its automatic or voluntary jurisdiction)…
4.9 You warrant, represent and undertake that you are and shall throughout the period of your appointment hereunder remain authorised and regulated by the Financial Conduct Authority and/or the Prudential Regulation Authority and/or any equivalent regulatory authority within the European Economic Area. Where you are a protected cell company you further warrant, represent and undertake that the relevant cell within such protected cell company shall throughout the period of your appointment hereunder remain authorised and regulated by the Financial Conduct Authority and/or the Prudential Regulation Authority and/or any equivalent regulatory authority within the European Economic Area.”
9.	It is important to appreciate, therefore, that as a consequence of the self certification regime and the existence of a CPS in relation to the classes of work identified under schemes 10 and 11 of Schedule 3 there are two routes to obtain building regulations approval. The first is by way of an application to the local authority seeking its approval. The second is by way of self certification on the basis of participation in a CPS. 
Events leading to the disputed decision
10.	UWC’s IBG was underwritten by Enterprise Insurance Company LTD (“EIC”) who were a company registered in Gibraltar. On 22nd July 2016 the Gibraltar Financial Services Commission issued directions under the relevant Gibraltese legislation directing EIC to immediately cease effecting new contracts of insurance thereby effectively preventing them from issuing any new insurance policies and causing them to cease trading. EIC entered into provisional liquidation on 25th July 2016 as a consequence of an order of the Gibraltar Supreme Court. 
11.	On 25th July 2016 Jacqueline Crawford, on behalf of the defendant, emailed David Bond on behalf of UWC indicating that it had been drawn to the defendant’s attention that UWC’s insurance provider had been instructed not to write any more new insurance contracts as it was insolvent. She sought advice as to how UWC intended to continue with an alternative supplier. Mr Bond responded shortly afterwards on the same day stating that a contingency plan had been put in place. The contingency plan was that UWC’s IBG was to be underwritten by an alternative insurer Safe World Insurance Group (“SWIG”). In his evidence to the court Mr Bond explains that within six hours of having been notified that EIC had been prevented from providing further cover, arrangements for policies to be underwritten by SWIG had been put in place. On the afternoon of 25th July in response to his email Ms Crawford sought copies of the revised policies and it was indicated to her that they would be provided later the same week.
12.	On 2nd August 2016 Ms Crawford chased Mr Bond for the revised policies which had yet to be provided to the defendant. She indicated that the defendant needed to undertake a desktop review of those documents and if she did not receive them by the following day she would have no option but to suspend the second claimant as an approved supplier. On 3rd August Mr Bond emailed Ms Crawford and others at the defendant attaching copies of the IBGs which they were issuing and explaining that they were underwritten by SWIG. The email continued as follows:
“The policy conditions and limits are the same. However, I want to highlight this does not currently include access to FSCS. In addition, access to FOS has been replaced by access to the Channel Islands Financial Ombudsman. This is an equivalent independent ombudsman service by way of the Guernsey Financial Services regulations and is recognised by FOS as an equivalent service, so I would not anticipate this provides any concern.
In respect of the required DCLS provision of financial protection, Safe World Insurance Group is an appropriately capitalised international insurance company. This model is similar to the Veka model, that you accept. This model does not meet the DCLG requirement regarding the provision of financial protection. This will also enhance our service further and benefit the consumers who use members by removing the reliance on an insurer whose solvency we cannot control. 
The Guernsey Financial Services Commission apply stringent controls to the financial solvency of an insurance company and only one Guernsey Insurance Company has ceased to trade. I am aware of your familiarity with this model and we would be more than happy to discuss this in more detail, should you require this and for you to visit SWIG’s office in Guernsey, should you wish to do so.
Whilst FSCS is not a mandatory requirement of DCLG. It is something we have been keen to pursue. Interestingly it is something a consumer can now access following changes in the PRA and FSCS rules regarding sales to UK consumers from organisations in the Channel Islands. We have held several discussions with the FSCS regarding SWIG informing policyholders of their access rights to FSCS on the insurance documentation and appropriate levy. This initially seemed a relatively simple process and SWIG had hoped to have the FSCS consent by yesterday and reflect this in the policy documentation; but it is now evident that this is a longer process than we were first led to believe. As a regulated entity neither we as the administrator or SWIG would include any reference to the FSCS, until they have confirmed their permission, regardless of what the FSCS rules indicate.
Unsurprisingly we also have a number of other insurers that would like to front our insurance, who are authorised in the UK, giving access to FSCS. We may yet consider this option, but this is not something that we could do or would want to do in haste and without appropriate due diligence.”
13.	On 4th August Ms Crawford wrote to Liam Gilsenan and Jon Vanstone of the defendant indicating that having reviewed the supplied policies and undertaken due diligence she “found no problems or discrepancies so am proposing to acknowledge approval of the arrangement”. She enclosed information in relation to SWIG and the protected cell model which it operated.  SWIG was a venture of Price Bailey Insurance PCC Limited in Guernsey. She sought Mr Gilsenan and Mr Vanstone’s agreement on behalf of the defendant in relation to the arrangements. She also stated as follows:
“FENSA has already approved Network Veka under a similar model. Network Veka are no longer registered with FCA and I am assuming that the Insurance Backed Guarantee Company (DGCOS) will probably now allow their registration to lapse.”
14.	Notwithstanding this email, later that day Ms Crawford emailed Mr Bond asking for more information as to how the protected cell worked and in particular what the solvency requirements of the cell were “so that it can be demonstrated that the homeowner would be covered should Safe World Insurance become insolvent or cease to trade”. Later that day Mr Gilsenan provided thoughts on the issues. He stated as follows:
“How secure is this cell set in comparison to the normal IBG companies we are using.
Is it any weaker. What if the DGCOS should crash and burn how if I am the homeowner, will I be protected ie were (sic) are the funds.
If it isn’t as secure as the others regardless of the risk to FENSA and lets assume there is non (sic) then it is possible that the FENSA brand could be damaged by association if there was to be a crash and difficulties started to arise through delays in funds.
Not sure how many companies are with DGCOS but I believe it to be substantial and if they have some big companies in respect of registrations then we have substantial risks.
Is the current agreement we have with the IBG companies structured well and robust enough to accommodate this.
In other words would this cell set up stand a stress test.
Obviously its not my field but I need to satisfy myself these points have been addressed and satisfactorily answered.”
In his evidence to the court Mr Vanstone explains that the references to the second claimant should in reality have been references to SWIG. 
15.	In response to the request for further information on 5th August Mr Bond emailed the following information:
“The Safe World Cell is a protected cell in Price Bailey Insurance PCC. The PCC as a whole holds the insurance license issued by the Guernsey Financial Services Commission (GFSC), but each cell is separately authorised to transact insurance business by the GFSC.
The Safe World Cell functions in all respects as a standalone insurer, but its administrative costs are lower because it pays a fixed fee representing a share of the operating costs of the PCC.
Each cell is required to maintain funds in excess of the regulatory capital requirements of a Guernsey Insurer. These are formula driven depending on the class of insurance, the level of premium and reserves and the type of assets held and consist of a Prescribed Capital Requirement (PCR) and a Minimum Capital Requirement (MCR). Regardless of the formula calculation, there is an absolute minimum requirement of £100,000. This lower limit applied across the PCC as a whole and does not necessarily apply for a cell. This is not an issue for the Safe World Cell as the formula gives a capital requirement in excess of £100,000.
As the requirement is formula driven it will change but, as a guide, the MCR (the lowest requirement and the point at which the GFSC will invoke its strongest sanctions – see below) will be 12% of the written premium in the last twelve months or 12% of the reserves held. Because the policies written have long durations, the reserves will build up as the cell only recognises the premium on an earned basis pro rata over the term of each policy. In real terms this means that the cell will always hold the bulk of premium for policies currently in force plus a margin of at least 12%...
The GFSC’s approach is very much one of not allowing an insurer to fail, rather than providing a limited backup, such as the FSCS, in case one fails.”
16.	On 9th August 2016, having considered this further information, Ms Crawford advised Mr Vanstone that she considered that the proposal was acceptable. She stated that she thought the risk of exposure to the defendant was low and enquired of Mr Vanstone whether he was prepared in Mr Gilsenan’s absence on holiday to authorise her to confirm acceptance. In the event it appears that Mr Vanstone was not prepared to make a decision without Mr Gilsenan and Ms Crawford advised Mr Bond that a decision would have to await the return of one of the defendant’s decision-makers from holiday. A meeting was held between Ms Crawford, Mr Gilsenan and Mr Vanstone on 16th August 2016. In his witness statement Mr Vanstone describes the agreement which he and Mr Gilsenan reached in the following terms:
“10.13 [Mr Gilsenan] and I agreed that the set up simply did not provide consumers with the level of protection on which FENSA prides itself. The cover offered had changed so as to render UWC in breach of the agreed Terms and Conditions. There was no access to the FSCS and no access to FOS. The strength of the financial protection was very different and FENSA was not satisfied it would adhere satisfactorily to its obligations under Condition 17, including that the funds are commensurate to the risk. In that regard, the non-availability of FOS and FSCS was highly relevant. In order to comply with condition 17, FENSA requires it’s approved IBG providers to ensure access to the UK FOS and FSCS. The bottom line is that whilst UWC’s former insurer, Enterprise, satisfied this, SWIG did not. Ultimately, all of the other approved providers gave FSCS and FOS access. Furthermore, none of them operated through a protected cell structure or used an insurance entity of which FENSA had no prior experience.”
17.	Following this meeting on 19th August 2016 Ms Crawford telephoned Mr Bond to tell him that the defendant had taken a decision no longer to accept protected cell companies on their list of approved insurance providers and that therefore the UWC IBG would no longer be recognised by them. Mr Bond protested, complaining that other companies such as Network Veka also operated protected cell companies and yet were still approved by the defendant. Ms Crawford indicated to him that Network Veka were also to be removed from the approved list and she would be advising Mr Ogilvie at that company that this was the case. Around this time Mr Bond also advised Ms Crawford that Insurance Window Guarantee (“IWG”) had an underwriter called Isle of Man Assurance Limited (“IMA”) which he also believed was a protected cell company. Ms Crawford indicated to him that the defendant had been advised that IMA were FSCS protected but this would be investigated. These issues are explored further below when considering the merits of the claimants’ grounds. 
18.	Following the telephone conversation an email was sent by Ms Crawford to Mr Bond in the following terms:
“This communication is to confirm our telephone discussions this morning.
Following a review of its requirements FENSA has taken the decision not to recognise the provision of financial support to consumers via its registrants by the use of the Cell concept.
FENSA would like to thank you for your previous support and patience whilst it considered your proposal. Should your product offering change then please do not hesitate to contact us.”
Later that day Ms Crawford called Mr Bond and explained to him that the defendant would continue to recognise all notifications up to and including 30th August 2016 and that the defendant would in that interim period be communicating with registrants to advise them that they needed to transfer to an alternative approved provider by 30th August 2016. On the same date Ms Crawford wrote to Mr Ogilvie at Network Veka advising them as follows:
“Following a review of the arrangements and policies that are being accepted for use by FENSA Registrants it has been decided that FENSA is no longer prepared to recognise provision via a Cell arrangement. As a result I am sorry to advise that this means that FENSA will no longer be able to recognise Network VEKA as an approved provider.”
19.	In his evidence to the court Mr Vanstone explains that he was unaware that this decision was to be taken in relation to Network Veka until he received the email to them set out above. He states that this was not a decision which had been discussed with him. After he received the email he sent what he describes in his evidence as a conciliatory email to Mr Ogilvie in the following terms later on the same day:
“I realise there has been some movements relating to FENSA and financial protection that may have caused you some concerns for which I apologise.
However what I wanted to say to you is that, putting this position to one side, we are keen as a collective to improve our working relationship with Network Veka.
I know many years ago we spoke of a form of partnership (at the time of Graham Hinett) and nothing came of it, so you know we went in a different direction.
Time has now passed and I wanted to know if there is an appetite from your side to look to the future in a way we can create some collaborative benefits.
We certainly are keen and if you are up for it I would like to meet for a lunch or drink and also introduce you to Liam Gilsenan of FENSA.
The sooner the better as far as I am concerned as I don’t want recent decisions to be seen as a move in a different direction.”
20.	In addition, on 19th August 2016 solicitors instructed on behalf of the claimants wrote to the defendant threatening a claim for injunctive relief. No response was received to that correspondence and the matter was chased by the solicitors on 22nd August 2016. The claimant’s solicitor (identified below as “RY”) then had a conversation with Mr Vanstone which is recorded in a telephone note in the following terms:
“RY speaking with Mr Vanstone pursuant to our letter of Friday afternoon and chaser letter of todays date to FENSA. Mr Vanstone explaining that he is not currently associated with FENSA and that therefore he did not receive our letter by email to his FENSA email but that he did receive it by other means, RY explaining that we had also copied the email of Friday to Jacqueline Crawford and Liam Gilsenan
In short, Mr Vanstone explaining that there is an internal meeting tomorrow morning at FENSA following which they will know a lot more as to their response and suggestions to our letter. RY explaining that we will look forward to hearing from Mr Vanstone and the representatives at FENSA following the said meeting, Mr Vanstone confirming that pursuant to our letter, no communications will be sent out to the registrants in question and that nothing further by way of enforcement action will be done until the meeting has taken place tomorrow morning and communications have been sent to ourselves in relation to the responses reached at the meeting.”
In response to this communication Jake Pilkington on behalf of the defendant contacted Mr Vanstone to seek a discussion. Mr Vanstone replied in the following terms:
“Thank you for your email.
As discussed with Richard yesterday, the operations of FENSA is not something I am part of but there is a meeting today with the business at 3pm to discuss what has occurred and the next steps.
FENSA has a responsibility to the market and its consumers to ensure the standards of service provided within the industry. The product you propose is very different from the approved model by FENSA for DGCOS and goes against the industry accepted norm so naturally it has raised concerns.”
21.	On the afternoon of 23rd August it appears from Mr Vanstone’s evidence before the court that a meeting occurred and a decision was taken that interim cover until 30th August 2016 could not be continued and UWC had to be suspended immediately. A letter was written on 24th August 2016 by Mr Gilsenan on behalf of the defendant to Mr Pilkington in the following terms:
“Further to recent communications regarding the change of circumstances to your insurance provider we have carried out a further review of the changes to your product that you recently submitted to FENSA.
We understand that this matter has come about due to circumstances out of your control, however the fact that your product has changed and does not now, comply fully to the FENSA terms and conditions in particular with section 4.
Therefore in view of FENSA’s requirements to protect the consumer in line with the Competent Person Scheme’s Conditions of Authorisations (COA) it is with regret we are suspending you from our approved Insurance Backed Guarantee (IBG) approved list of suppliers with immediate effect.
We will in due course be notifying all the FENSA installers directly affected by this decision advising them that due to changed circumstances of The Insurance Backed Guarantee Company FENSA will not accept any notifications with this IBG provider and that alternative choice will need to be made from one of the other 11 FENSA approved IBG providers.”
22.	In fact, on the same day, Ms Crawford raised the application of Clause 4.9 of the conditions of the contract between the claimants and the defendant and raised the question as to whether or not this recognised the use of cell models and on the (mistaken) assumption that Guernsey was within the EEA the defendant might be in breach of contract. On the following day the second claimant announced its new partnership with the Assure CPS to replace its relationship with the defendant. Complaints were made about the defendant’s decision, which proved ultimately unsuccessful, to both UKAS and also the third interested party. Enquiries were made by Ian Drummond on behalf of the third interested party of the defendant seeking responses to the complaints which had been made by the claimants. In an email dated 31st August 2016 Mr Vanstone responded to his queries as follows:
“DGCOS has now set up a fundamentally different protection structure, similar to that used in the Insulation sector. Due to the fact that FENSA cannot confirm adherence to the elements of condition 17 (consumer requirement for direct access to the monies and that the funds are commensurate to the risk) FENSA has had to suspend DGCOS after several weeks of discussion until it returns to the model for which it was approved by FENSA (and uses one of the underwriters who already supply the sector – e.g. Redlands / GPI / Elite – or a comparative provider).
Captive cells with limited liability beyond the scope of the FCA (of which this new DGCOS provision is one), is something I would be very nervous in seeing approved by any scheme without sizeable controls and measures in place to ensure the financial protection of the consumer. I believe it is unreasonable to expect schemes such as FENSA to carry solvency expertise to enable low cost operational models such as that adopted by this provider.”
23.	Ultimately, judicial review proceedings were threatened on behalf of the claimants against both the defendant and the third interested party. The defendant’s response to the claimant’s pre action protocol letter contained the following explanation as to why the decision had been reached to remove UWC from the list of recognised IBGs:
“20. FENSA has decided that it will only approve mechanisms for providing consumers with appropriate financial protection if they constitute protected contracts for the purposes of the UK FSCS and are covered by the UK FOS. For this reason the conditions of approval agreed with UWC include clause 4.7.
21. As of the date of Enterprise becoming insolvent UWC was not complying with clause 4.7. Indeed it is apparent from its email of 3 August 2016 that the change in UWC’s IBG did not include access to FSCS and neither was SWIG covered by the UK FOS.
22. For these reasons, on 24 August 2016 Mr Gilsenan, FENSA’s General Operations Manager, wrote to Mr Pilkington of UWC/DGCOS confirming that UWC’s product no longer complied with the terms and conditions of approval, in particular with section 4. Mr Gilsenan invited a review of the IBG to see if it could be brought back within the conditions of approval. We note that there are many other underwriters with whom UWC could have replaced Enterprise and remained compliant with clause 47.
23. We note that it is asserted that FENSA changes its conditions of approval so as to exclude protected cell companies. That is incorrect. Where in correspondence, employees of FENSA have used the term “the cell concept” they were referring in a general sense to UWC’s proposed use of SWIG as replacement underwriter.
24. For the avoidance of doubt, FENSA is not required to scrutinise in detail the robustness of any proposed IBG. Indeed clause 4.7 is designed to give FENSA the assurance it needs that consumers will be adequately protected without having to evaluate further the sustainability of the mechanism. Whilst we note other CPSs may have different conditions of approval we note that it is not alleged that clause 4.7 is irrational or otherwise unlawful.
25. Of course as is demonstrated by its actions, UWC is free to seek approval of its IBG by other CPSs. Similarly, as far as FENSA is concerned those members of DGCOS who wish to remain or become members of FENSA are free to use any of its 11 approved IBG providers.”
24.	In their evidence it is explained by the claimants that as a consequence of the defendant’s decision the second claimant has lost a significant number of its members and sustained a significant loss in membership income and registration fees. It anticipates that those losses will continue and that membership numbers will decrease further. Significant resources have been deployed by the claimants to secure the transfer of business to the new partnership with Assure. Notwithstanding all of these efforts to mitigate their losses the claimants remain concerned as to the impact of the defendant’s decision on their business. 
The issues
25.	Within their evidence the claimants identify that the defendant’s CPS controls around 82% of the market. The claimants also draw attention to the fact that the defendant is a wholly owned subsidiary of the Glass and Glazing Federation (“GGF”). Another wholly owned subsidiary of the GGF is GGFi Limited (“GGFi”). GGFi specialises in the procurement of IBGs for the double glazing sector. It is therefore a direct competitor of UWC. The effect of this corporate structure is therefore that the defendant is part of a group of companies which include a direct competitor of UWC. Furthermore, the claimants point out that Mr Vanstone was at the time of reaching the decision which is in question in this case the managing directing of GGFi, UWC’s direct competitor. As a consequence of these and other contentions the claim, as originally formulated, included a suggestion that the defendant had acted for an improper purpose in taking the decision under challenge. It was contended that the decision was taken so as to promote the commercial advantage of GGFi. In the claimant’s skeleton argument at the hearing they made clear that this contention was no longer pursued and that they reserved their position in relation to what may have been the true motivation of the defendant in reaching the decision which they did. 
26.	The questions, therefore, which remain for determination in this case are firstly, whether or not the defendant’s decision of 19th August 2016 and 24th August 2016 was a public law decision against which an action for judicial review lies. Secondly, on the basis that judicial review is available to the claimants, the claimants submit that there were a number of public law errors in the defendant’s decisions. Firstly, it is contended that the defendant were under a duty to make reasonable enquiries in relation to the arrangements which had been put in place by the claimants following the collapse of EIC. No proper enquiries were undertaken by the defendant before reaching their decision and this was an error of law. Secondly, the claimants contend that there was procedural unfairness in the way in which the decision was reached. None of the concerns which were relied upon by the defendant were properly put back to the claimants so as to enable them to deal with them and have an opportunity to satisfy the defendant that there was no substance in their concerns. Thirdly, the claimants contend that the decision which was reached was irrational. In particular, they point to suggested inconsistencies and incoherence in the reasons which were offered by the defendant for the decision; they point to other instances where protected cell arrangements or arrangements without access to the FSCS or FOS schemes were endorsed by the defendant; they submit that in substance the Guernsey based scheme for insolvency which is available pursuant to the arrangements with SWIG amounts to the equivalent of that provided by the FOS. Finally, it is submitted that the reasons provided by the defendant for their decision were incoherent and inconsistent and thus there was a failure to give adequate reasons for the decision. 
Is the defendant’s decision amenable to judicial review?
27.	The defendant contends that the claimants are not entitled to bring this action as the decision which it reached is not one which was susceptible to judicial review. It is important before embarking upon a detailed examination of the issues which this point raises to be clear about the nature of the decision which is under challenge. The decision which the defendant took and which is complained about was to remove the claimants from their approved list of suppliers of IBGs for the purposes of their CPS. 
28.	In R v Panel on Takeovers and Mergers Ex Parte Datafin PLC [1987] 1 QB 815 Lloyd LJ stated as follows at page 846E-847D:
“So I turn to Mr. Alexander's more technical argument. He starts with the speech of Lord Diplock in CCS .U. v. Minister for Civil Service [1985] 1 A.C 374 at page 409:
"For a decision to be susceptible to judicial review the decision-maker must be empowered by public law (and not merely, as in arbitration, by agreement between private parties) to make decisions that, if validly made, will lead to administrative action or abstention from action by an authority endowed by law with executive powers, which have one or other of the consequences mentioned in the preceding paragraph. The ultimate source of the decision-making power is nearly always nowadays a statute or subordinate legislation made under the statute; but in the absence of any statute regulating the subject matter of the decision the source of the decision-making power may still be the common law itself, i.e., that part of the common law that is given by lawyers the label of 'the prerogative.' Where this is the source of decision-making power, the power is confined to executive officers of central as distinct from local government and in constitutional practice is generally exercised by those holding ministerial rank." 
On the basis of that speech, and other cases to which Mr. Alexander referred us, he argues (i) that the sole test whether the body of persons is subject to judicial review is the source of its power, and (ii) that there has been no case where that source has been other than legislation, including subordinate legislation, or the prerogative. I do not agree that the source of the power is the sole test whether a body is subject to judicial review, nor do I so read Lord Diplock's speech. Of course the source of the power will often, perhaps usually, be decisive. If the source of power is a statute, or subordinate legislation under a statute, then clearly the body in question will be subject to judicial review. If, at the other end of the scale, the source of power is contractual, as in the case of private arbitration, then clearly the arbitrator is not subject to judicial review: see R. v. National Joint Council for the Craft of Dental Technicians, ex parte Neate [1953] 1 Q.B. 704. 
But in between these extremes there is an area in which it is helpful to look not just at the source of the power but at the nature of the power. If the body in question is exercising public law functions, or if the exercise of its functions have public law consequences, then that may, as Mr. Lever submitted, be sufficient to bring the body within the reach of judicial review. It may be said that to refer to "public law" in this context is to beg the question. But I do not think it does. The essential distinction, which runs through all the cases to which we referred, is between a domestic or private tribunal on the one hand and a body of persons who are under some public duty on the other.”
29.	In the subsequent case of R v Chief Rabbi of the United Hebrew Congregations of Great Britain and The Commonwealth Ex Parte Wachmann [1992] 1 WLR 1036 Simon Brown J (as he then was) had to consider whether the declaration of the Chief Rabbi in a disciplinary inquiry in relation to the claimant was amenable to judicial review. He concluded that it was not. His conclusions were reasoned as follows at page 1041C – 1042A:
“The public element
Mr. Beloff invites my attention to certain passages in the judgments of the Court of Appeal both in Law's case and in the Datafin case [1987] Q.B. 815 . I need not recite them. Their effect is clear enough. To say of decisions of a given body that they are public law decisions with public law consequences means something more than that they are decisions which may be of great interest or concern to the public or, indeed, which may have consequences for the public. To attract the court's supervisory jurisdiction there must be not merely a public but potentially a governmental interest in the decision-making power in question. And, indeed, generally speaking the exercise of the power in question involves not merely the voluntary regulation of some important area of public life but also what Mr. Beloff calls a “twin track system of control.” In other words, where non-governmental bodies have hitherto been held reviewable, they have generally been operating as an integral part of a regulatory system which, although itself non-statutory, is nevertheless supported by statutory powers and penalties clearly indicative of government concern. 
Perfectly evidently it was just such considerations which led Popplewell J. (and even then with obvious reluctance) recently to conclude in Reg. v. British Pharmaceutical Industry Association Code of Practice Committee, Ex parte Professional Counselling Aids Ltd., The Independent, 1 November 1990 that the code of practice committee of the British pharmaceutical industry is reviewable. And certainly it is a feature of all these cases that, were there no self-regulatory body in existence, Parliament would almost inevitably intervene to control the activity in question. There is much emphasis on this consideration in the Datafin case itself. That was also the position in Reg. v. Advertising Standards Authority Ltd., Ex parte The Insurance Service Plc., The Times, 14 July 1989 . Even, moreover, in Ex parte RAM Racecourses Ltd., The Times, 6 April 1990 , where the respondent body operated entirely outside any relevant statutory context (albeit under Royal Charter) — and a decision which arguably carries the review jurisdiction to its widest limits thus far — I described the Jockey Club's discharge of its “functions of regulating racecourses and allocating fixtures” as “strikingly akin to the exercise of a statutory licensing power,” and its position “holding as it does monopolistic powers in this important field of public life” as “a position which could as well have been enshrined in legislation.” 
It cannot be suggested, Mr. Beloff submits and I accept, that the Chief Rabbi performs public functions in the sense that he is regulating a field of public life and but for his offices the government would impose a statutory regime. On the contrary, his functions are essentially intimate, spiritual, and religious — functions which the government could not and would not seek to discharge in his place were he to abdicate his regulatory responsibility. ”
30.	As was pointed out during the course of argument, the fact that the relationship between the claimants and the defendant is purely contractual does not exclude that there may be a remedy by way of judicial review in respect of certain decisions. In R v Bristol City Council Ex Parte DL Barrett and Sons unreported (CO/4181/1999) Jackson J (as he then was) had to address a judicial review in relation to the removal of the claimants from the defendant’s tendering  list of contractors for construction work. It was said by the defendant that its decision was not susceptible to judicial review. Jackson J set out the relevant law and his conclusions in the following terms:
“35. Section 17 of the Local Government Act 1988 provides as follows:
(1) It is the duty of every public authority to which this section applies, in exercising, in relation to its public supply or works contracts, any proposed or any subsisting such contract, as the case may be, any function regulated by this section to exercise that function without reference to matters which are non-commercial matters for the purposes of this section…
(4) The functions regulated by this section are—
(a) the inclusion of persons in or the exclusion of persons from—
(i) any list of persons approved for the purposes of public supply or works contracts with the authority, or
(ii) any list of persons from whom tenders for such contracts may be invited;…
36. Section 17(5), which I will not read out, lists a number of matters which are classified as non-commercial. Section 19 of the 1988 Act provides:
(7) The duty imposed by section 17(1) above does not create a criminal offence but—
(a) in proceedings for judicial review, the persons who have a sufficient interest or, in Scotland, title and interest in the matter shall include any potential contractor or, in the case of a contract which has been made, former potential contractor (or, in any case, any body representing contractors), as such; and
(b)  a failure to comply with it is actionable by any person who, in consequence, suffers loss or damage…
(9) Nothing in section 17 above or subsection (1) above implies that the exercise of any function regulated by that section may not be impugned, in proceedings for judicial review, on the ground that it was exercised by reference to other matters than those which are non-commercial matters for the purposes of that section.
37. Section 20 of the 1988 Act provides:
(1) Where a public authority exercises a function regulated by section 17 above by making, in relation to any person, a decision to which this section applies, it shall be the duty of the authority forthwith to notify that person of the decision and, if that person so requests in writing within the period of 15 days beginning with the date of the notice, to furnish him with a written statement of the reasons for the decision.
(2)This section applies to the following decisions in relation to any person, namely—
(a) in relation to an approved list, a decision to exclude him from the list
38. In R v London Borough of Enfield ex parte T F Unwin (Roydon) Ltd [1989] 46 BLR 1, the Divisional Court of the Queen’s Bench Division considered the operation of these provisions. The court also considered the nature of a local authority’s public law obligations when removing building contractors from an approved list. The contractors in that case (“Unwin”) had worked for the council over many years. In September 1988 Enfield suspended Unwin from its list of approved contractors on suspicion of improper conduct, which was being investigated. The council failed to give reasons for its decision. Unwin applied for an order quashing the council’s decision on three grounds. Those three grounds are set out in some detail by Glidewell LJ at pp 11-16 of the report. In essence the grounds were:
39. (1) The council’s failure to give reasons for its decision was a breach of section 20 of the 1988 Act.
40. (2) The council had acted unfairly. The argument ran that Unwin had a legitimate expectation that they would not be removed from the list of approved contractors and would be entitled to tender for the renewal of the maintenance contract unless Enfield had communicated to them some valid and sufficient reason to the contrary. Thus Enfield were under an obligation to supply to Unwin reasons for their intended action, to give Unwin a reasonable opportunity to make any response they wished, and to consider that response fairly before deciding either to remove them from the list of approved contractors or to refuse to allow them to tender for the renewal of the maintenance contract. The council, it was argued, had not complied with those obligations. 
41. (3) The council’s decision to suspend Unwin from the list was irrational.
42. The Divisional Court held that Unwin succeeded on the first two grounds and that it was not necessary to adjudicate upon the third. At page 18 of the report, Glidewell LJ (with whom Pill J agreed) said this in relation to Unwin’s first two grounds:
“Accordingly I conclude that the circumstances here were not such as to deprive Unwin of their entitlement to be told of the accusations against them, and given a chance to answer, before the decisions were made. Though I do not suggest that in every case a local authority which terminates its relationship with a contractor will be obliged to do more than the 1988 Act requires, nevertheless on the facts of the present case I accept Mr Pardoe’s submission that Unwin had a legitimate expectation of fair treatment outside the Act. This expectation was not met and there was a clear breach of section 20. Decisions made unfairly should not normally be allowed to stand, and I would therefore quash both the decisions which are the subject of these proceedings.”
43. Of course the facts in the Enfield case were different from the facts of the present case. The allegations in the Enfield case were particularly serious because they related to possible criminal conduct. Nevertheless the Enfield case illuminates the principles which this court should apply when considering the legality of a local authority’s decision to exclude contractors from an approved list of tenderers.
44. At this point I should mention an argument advanced on behalf of the council by Mr Bowsher. Mr Bowsher submits that a local authority’s decision to exclude contractors from an approved list of tenderers is not susceptible to judicial review. So long as the local authority gives reasons, and those reasons are of a commercial character, that is an end of the matter. It is immaterial whether those reasons are good or bad. The local authority has complied with its obligations under section 20 of the 1988 Act…
45. I am afraid that I do not agree. What Glidewell LJ said about unfairness and legitimate expectation forms part of the ratio of the decision in ex parte Unwin. It is binding upon me and I must follow it. See R v Manchester Coroner ex parte Tal [1985] QB 67 at 81D-E. Furthermore, as a matter of general principle, a decision by a local authority to strike a contractor off an approved list of tenderers does not contain a public law element. This view is reinforced by the provisions of section 19 of the Local Government Act 1988, which contemplate the possibility of judicial review in respect of such decisions.”
31.	This line of authority was followed by Lloyd-Jones J (as he then was) in R (on the application of A) v B Council [2007] EWHC 1529 (Admin). The claim in that case concerned the removal by an education authority of a sub-contractor driver from its education transport contracts. The removal arose as a consequence of CRB checks on the claimant disclosing that she had a criminal past. In operating the contracts, section 17 of the Local Government Act 1988 (as set out above) was relevant. Lloyd-Jones J cited the decisions in ex parte Unwin referred to above and ex parte Barrett and concluded that ex parte Unwin was binding upon him and that both of the authorities were directly in point. He formed the following further conclusion:
“28 Furthermore, I consider that there is considerable force in the submission that there is a pronounced public law element to the decision which is challenged in this case. The Council was not simply exercising a contractual power to require the removal of a sub-contractor. It was not merely a matter of commercial assessment and its economic consequences. It was taking a policy decision in pursuit of its public duties as an education authority as to the suitability of the claimant to act on behalf of the Council in the discharge of these particular functions. The Council, in exercise of its public law powers, has set up an elaborate structure to enable it to give effect to its policy decisions as to the suitability of individuals to provide services.”
32.	By contrast to this, Mr Jamie Burton, who appeared on behalf of the defendant, drew attention to the case of R v Servite Houses & Wandsworth LBC Ex Parte Goldsmith and Chatting [2001] 33 HLR 35. In brief, the facts of that case were that two older people were assessed as being in need of residential accommodation and pursuant to sections 21 and 26 of the National Assistance Act 1948. Arrangements were made by their local authority for them to be accommodated in a purpose built registered care home owned by Servite Houses, a registered social landlord. They were promised that, provided they did become so ill as to require nursing care, they could remain in that care home for the rest of their lives. The contract between the local authority and Servite provided that either party could terminate the agreement under which the claimants were accommodated by giving notice. Servite then decided to close the care home as a consequence of financial problems and indicated that they would assist the local authority in finding alternative accommodation for its residents. The claimants brought an action for judicial review and argued that although Servite was a private body it was susceptible to judicial review because in providing accommodation under section 26 of the 1948 Act it was exercising a function of a public body. 
33.	Having reviewed the authorities Moses J concluded at paragraphs 76 and 77 as follows:
“76…Does Section 26 enmesh provision of residential accommodation by Servite into a statutory system of community care for those in need of such accommodation? Servite and Wandsworth argue that Section 26 has precisely the contrary effect. It empowers a local authority to make arrangements which divorce a private service provider from the public law obligations to which the local authority is subject when making arrangements under that section. It has the effect, in short, of disentangling Servite from any statutory embrace with Wandsworth. Section 26 has the effect of permitting a local authority to discharge its public duty by entering into a private arrangements, Section 26 was introduced for the purpose of creating what Miss Laing on behalf of Wandsworth described as a ‘mixed economy’ provision of community care services. Section 26 has the consequence that both the public and private sector provide such services. It follows that not only is the relationship between Servite and Wandsworth governed solely by the terms of the contract between them, but the relationship between Servite and the Applicants is solely a matter of private law. Servite, so it is argued, provides accommodation as a matter of private law and that accommodation is paid for by Wandsworth at the rates for which the arrangements provide (see Section 26(ii) of the 1948 Act). In short, the provision of residential accommodation is taken outside the scope of the public function by virtue of Section 26. In my judgment, Wandsworth and Servite are correct. The Applicants cannot rely upon Section 26 as the foundation for submitting that Servite's function is a public function. In most, if not all cases of “privatisation”, legislation is necessary to enable that which had hitherto been provided by government or local authority to be provided by the private sector. It does not seem to me that reliance can be placed upon the very legislation which enables privatisation to take place...
77. Servite is a private body which does not owe its existence to Section 26. Its power to enter into a contract with Wandsworth does not depend upon Section 26, but upon its own private rules…It is the distinction between legislation which adds a public function to the private functions of a private body and legislation which permits a public law duty to be discharged by entry into private law arrangements. It does not seem to me that the Applicants can successfully contend that because legislation permits a public authority to enter into arrangements with a private body, the functions of the private body are, by dint of that legislation, to be regarded as public functions. I conclude that the Applicants cannot rely upon Section 26 as establishing a sufficient statutory underpinning of Servite's functions to enable their functions to be identified as “public functions”.”
34.	Mr Burton also drew attention to the case of R v The Lord Chancellor Ex Parte Hibbitt and Saunders The Times Law Reports 12th March 1993 in which there was a challenge by way of judicial review to the award of a contract following a tender process by unsuccessful tenderers in relation to the provision of transcription services at certain courts. The conclusions of Rose LJ were as follows:
“But it was not, in his Lordship’s judgment, appropriate to equate tendering conditions attendant on a common law ability to contract, with a statement of policy practice or policy decisions in the spheres of inland revenue, immigration and the like, control of which were the special province of the state. His Lordship said that although the applicants had his sympathy and had been treated unfairly, it was impossible to give them the relief they claimed by way of judicial review because the decision challenged lacked a sufficient public law element.”
35.	To like effect was a judgment given on an application for permission to apply for judicial review in the case of R v Great Western Trains Company Limited Ex Parte Frederick (unreported CO/1325/1997).
36.	I have set out above the statutory regime with which this case is concerned. In support of the contention that the defendant’s decision is amenable to judicial review Mr Tim Ward QC, who appeared on behalf of the claimants, submits that both the contract with the claimants and also the removal of the claimants from the approved list of providers of IBGs were the exercise of a public function. He draws attention to the fact that the defendant is specifically identified in the schedules to the 2010 Regulations as being authorised to set up a CPS. The purpose of that authorisation is to supervise building activities pursuant to the 1984 Act, and to ensure in the public interest that installations are undertaken in accordance with appropriate standards and supported by appropriate financial provision in relation to, for instance, insurance in the event of failure of the installation and the insolvency of the installer. In effect the functions of the 1984 Act are being discharged through these arrangements and the defendant is part of a regulatory system. 
37.	Mr Ward relies upon the case of ex parte Wachmann and contends that there is a clear governmental interest in compliance with the Building Regulations, and if providers of CPS’s did not exist then the Government would have to step in. As a complimentary submission he draws attention to the fact that installers cannot choose whether to comply with the regime of Building Regulations overall: they either have to submit to inspection by the local authority or a competent, independent, private contractor undertaking a building inspection, or, alternatively, engage with the self-certification regime of which the defendant is part. Mr Ward submits that the cases of Ex Parte Hibbett and Saunders and Ex Parte Frederick were clearly concerned with commercial contracts and the Servite case is also of limited assistance since this again was simply a contract with a private body to discharge a public power vested in the local authority. That is a situation which is not analagous to the present case. He submitted that the line of authority culminating in R (on the application of A) v B Council was closer to the present case and illustrated that public law duties would arise where contracts were entered into which had an overlay of a public law character. 
38.	Mr Burton in his submissions emphasised that the defendant was a private body, and the source of its power was essentially an agreement with the third interested party enabling it to set up a CPS. Looking at the nature of the power, whilst he accepted that it was enmeshed within a regime of building regulation control, he drew attention to a number of features which supported his submission that the decision in question was not amenable to judicial review. Firstly, he drew attention to the facts that the defendant did not receive any public money for performing the function which it did, and that it could not be compelled to run a CPS.  He submitted that in so far as the CPS was an alternative means of satisfying building control, and not a substitute for it or a delegation of it, that too favoured the conclusion that the decision was not a public law decision, and also supported the contention that if the defendant did not perform this function the Government would not step in to perform it for them. That was not in the nature of the scheme. The scheme firstly, contemplated a number of providers of CPS’s and secondly, existed alongside the regime supervised by local authorities or privately instructed building inspectors. He drew attention to the fact that installers were not obliged to join a CPS or indeed be any part of one: they could choose to use the local authority regime and, furthermore, they had a choice of which CPS they might use. He further drew attention to the fact that all of the arrangements concerned in the case were contractual and were arranged accordingly. 
39.	Finally, he drew attention to the breadth of the discretion afforded to the defendant as the operator of a CPS by condition 17. The breadth of this discretion is described in the evidence provided by Ian Drummond on behalf of the third interested party in which at paragraphs 26-28 he stated as follows:
“26. Condition 17 is not prescriptive as to the type of financial protection provided so long as that protection meets the conditions set out in the previous paragraph of this statement. Some schemes have set up their own protected fund but the most common way of providing the necessary financial protection is through the provision of insurance-backed warranties. UKAS as part of monitoring the accreditation of schemes has the responsibility of checking that, whatever type of personal financial protection is provided, the protection satisfies the conditions in Condition 17.
27. I wrote to FENSA to explain the Department’s understanding of the Condition on 31 August 2016 … saying “In our view it is entirely a matter for FENSA who is on the list so long as Condition 17 is being complied with. If FENSA wished to remove a provider from this list that is entirely a matter for FENSA so long as Condition 17 remains satisfied.
28. Condition 17 is not prescriptive on whether a scheme should have one, or more than one, financial protection product available, nor on whether a product should be provided in house or by an external supplier. Nor does Condition 17 prevent a scheme operator from removing a product from its list of approved products for whatever reason, even if the product complied with Condition 17. These choices are left to the scheme operator with no Departmental intervention. The Department’s only concern is that the scheme operator has at least at least one product or arrangement meeting the requirements of Condition 17 available.”
40.	Against this background it was submitted by Mr Burton that given the breadth of the discretion under condition 17, which is not challenged by the claimants, there is a clear freedom of choice as to how the defendant chooses to construct and administer its CPS which again supports the contention that the arrangements are purely contractual and do not engage any public law issue. 
41.	As was observed by the divisional court in R (on the application of Holmecroft Properties Limited) v KPMG LLP and Others [2016] EWHC 323 (Admin) at paragraph 23:
“23. The question whether a body is susceptible to judicial review is not always easily answered. The principles are tolerably clear, albeit stated at a high level of abstraction, and they are not in dispute in this case. But their application in any particular case can be problematic and it is the application of the principles to the circumstances of this case which divides the parties.”
42.	The question of whether or not the decision made by the defendant to remove the claimants from their list of approved IBGs in the present case has not been easy to resolve but, ultimately, I am satisfied that the decision is not one which is susceptible to judicial review and rather that it was a decision governed solely by the private law in relation to the contract which the first claimant had entered into with the defendant. 
43.	The starting point for the consideration of this issue must be the statutory scheme within which the defendant operates. I accept, as is obvious, that self-certification schemes under Regulation 20 of the 2010 Regulations exist as part and parcel of the statutory scheme for building control, and that within the Regulations themselves the defendant has been identified as authorised to conduct a CPS. However, the system of self-certification was clearly brought into existence as an alternative to regulation by local authorities or other independent building inspectors and as a form of opted-out self-regulation for the construction industry, and in particular in this case those who carry out the types of instalment within paragraphs 10 and 11 of Schedule 3 of the 2010 Regulations. 
44.	Under this system of self-regulation it is clear from the breadth of the conditions provided that the operators of CPS’s are afforded considerable latitude in how they choose to construct their CPS. The Conditions of Authorisations provide key objectives for the CPS, but the operators of the CPS are left to their own devices as to how those objectives are met by their particular arrangements. Taking condition 17 as an example, it is clear from Mr Drummond’s evidence that the operation of the condition leaves to the operator of the CPS a very wide scope as to how it chooses to meet the requirements of the condition. For instance, it may choose to require of those who use its scheme requirements which are not specified or necessarily required to meet condition 17, but which rather gold-plate its requirements. As the third interested party’s evidence from Mr Drummond records, neither the 1984 Act nor the 2010 Regulations set out any criteria for the operation of a CPS. 
45.	The Conditions of Authorisations are issued by the third interested party and are used by the fourth interested party, UKAS, to monitor compliance. The effect therefore of Regulation 20 is in my view to establish a self-regulation regime as an alternative but not a substitute for that operated by the local authority. The source of the power to provide for self-certification under a CPS is not simply the identification of the defendant within paragraphs 10 and 11 of Schedule 3 of the 2010 Regulations, but their acceptance of the Conditions of Authorisations and their operation of a CPS which, having been devised by the defendant, meets the requirements of the Conditions of Authorisations. How those requirements are to be met is left to the defendant. Compliance with those Conditions of Authorisations is thus the source of the power to self-certify. In addition to this feature, it is important to note that (in the light of Simon Brown J in the case of ex parte Wachmann at page 1041F) if no party chose to operate a CPS, Parliament would not intervene: the system of local authority Building Regulation control would continue but without the alternative and complimentary opportunity for self regulation. 
46.	In the light of these conclusions I am satisfied that the arrangements made by the defendant in order to meet the requirements of the Conditions of Authorisations, and thus the decision to remove the claimant’s IBG from their list of approved suppliers, was a private law matter and not a decision which engaged public law giving rise to the availability of judicial review. The arrangements which the defendant chose to put in place in order to comply with the Conditions of Authorisations were themselves purely contractual, in so far as they related to their relationship with their members and installers, and related to their agreement to abide by the Conditions of Authorisations which were published by the third interested party. 
47.	I am not dissuaded from that view by the line of cases which culminate in R (on the application of A) v B Council. Those cases, as set out above, concerned the placing of contracts which was itself the subject of statutory provisions under the 1988 Act, in circumstances where the relevant provisions of the 1988 Act contemplated proceedings for judicial review if they were not complied with. That statutory framework provided the decision as to how those contracts were to be placed with what Lloyd-Jones J described as “a pronounced public law element”. In my view that is quite different from the defendant’s construction of its own contractual arrangements with, amongst others, the claimants so as to operate a CPS which abides by Conditions of Authorisations. How those arrangements are constructed are, in my view, purely a private law issue. The arrangements do not have to be constructed and entered into in accordance with any public law duty or obligation such as to do so “without reference to matters which are non commercial matters” as was the duty under section 17 of the 1988 Act. 
48.	I can see force in Mr Ward’s submission that the Servite case is not on all fours with the present case. That was, as Moses J described, a case of privatisation. As I have set out above the statutory scheme and the arrangements pursuant to it are different in the present case. However, for the reasons which I have given I am satisfied that the arrangements which a person who is authorised to operate a CPS puts into place to meet the Conditions of Authorisations are private law contractual arrangements. They are private law contractual arrangements entered into with, for instance, installers who take advantage of the defendant’s CPS or the providers of IBGs who support the defendant’s operation of their CPS and assist them in meeting requirements of condition 17. 
49.	Further features of the arrangements which support the view that the defendant in operating them is not subject to the supervisory jurisdiction of the court by way of judicial review are that, as Mr Burton pointed out, installers are not obliged to join a CPS or be any part of one: as set out above the local authority administered scheme of building control is always available. Moreover, they have a choice of a number of CPS’s that they can join if they wish to. In reality there is a market operating between those authorised to conduct a CPS and the operators compete for the self certification business of installers. These matters contribute to the ingredients in the present case which persuade me that the arrangement in question in this case engages private law rather than public law. 
50.	Notwithstanding this conclusion I propose to examine and provide conclusions on the substantive Grounds of challenge in case I am wrong about whether or not this dispute is properly amenable to judicial review. To assist in the analysis of the Grounds I have not addressed them in the same order as they were set out in the course of argument and as they have been set out above for reasons that are explained below.
The claimant’s Grounds of challenge
The decision which the defendant reached was irrational and perverse
51.	I have decided to commence the consideration of the merits of the defendant’s decision with this aspect of the claimant’s case since it raises further factual issues which it is sensible to set out before dealing with the other aspects of their claim. In respect of the allegation that the defendant’s decision was irrational the argument advanced by Mr Ward commences from observing that condition 17 of the Conditions of Authorisations does not require that any financial protection which is provided should have access to the FSCS or FOS. As such it is submitted by Mr Ward that the revocation of the approval of the IBG provided by the defendant was unreasonable in the Wednesbury sense since it appears from the defendant’s decision that they have placed a blanket ban on the consideration of the protected cell arrangement without properly assessing the degree of protection afforded by the level of regulation provided in the Channel Islands. He submits that it was irrational to require FOS protection as part of any financial protection package which was provided by IBGs. Furthermore, he submits that it was irrational to require the claimants to have FSCS approval not only on the basis that it was not a requirement of condition 17 but also, and in particular, because there was evidence that the defendant had endorsed the use of other IBGs which were not covered by the FSCS and were provided by Network VEKA and IWG. Mr Ward submits that it is, as Lord Hoffmann observed in Matadeen v Pointeu [1999] 1 AC 98 at 109C-D, an axiom of rational behaviour that like cases will be treated alike. On the basis that the defendant was prepared to approve the use of Network Veka’s IBG which was based on a protected cell arrangement and not covered by the FSCS, and also endorsed the use of IWG’s IBG without FSCS protection, it was perverse for them to decide that the absence of FSCS protection was a reason for removing the claimants from the approved list of IBG providers. 
52.	In my view some of the preliminary submissions which are made by Mr Ward are persuasive. It is clear from the contractual arrangements that there is no ban on protected cell structures (see clause 4.9 of the contract) provided that such cell structures are protected by the FSCS. If they are regulated within the EEA as a consequence of passporting arrangements, then they would have the benefit of FSCS protection. I do not, however, consider that it was irrational of the defendant in principle to require as a clause of their contractual arrangements with IBG providers that the financial protection of FSCS cover was provided to consumers. Whilst it is not an explicit requirement of condition 17 of the Conditions of Authorisations, equally there is nothing in condition 17 which precludes it being a requirement. On the basis that the defendant are one of a number of CPS’s from which installers can choose, offering the certainty of FSCS protection to consumers is in my view an entirely reasonable approach to providing a form of quality assurance to the defendant’s scheme of financial protection. Similar considerations arise in relation to access to the FOS. In my view, in this Ground the real question is whether or not the claimant has established that the defendant has treated like cases differently, and if it has whether or not that amounts to irrationality. In order to answer that question it is necessary to examine in a little more detail the evidence in relation to Network Veka and IWG to see whether in substance they were parties in a similar position to the claimants. 
53.	Starting with the evidence in relation to Network Veka, that organisation operates the Assure CPS which is authorised by the third interested party. In evidence provided by Mr Ogilvie, on behalf of Network Veka, he describes their IBG and the relationship between Network Veka and the defendant in the following terms:
“8. In accordance with the Conditions of Authorisations set by DCLG, Network VEKA provides a 10-year workmanship insurance backed guarantee, deposit and staged payment insurance. We produce this policy on behalf of our members from Mannequin Insurance PCC Limited, of Heritage Hall, PO Box 230, Le Merchant Street, St Peter Port, Guernsey, GY1 4JH (“Mannequin”). Mannequin is a protected cell company authorised and regulated by the Guernsey Financial Services Commission (registration number 127372). They operate on Network VEKA’s behalf, a protected cell called the ‘NV39 cell’ to provide our insurance policies. I refer to a copy of the Network VEKA policy at pages 1 to 8.
9. Policies issued for Network VEKA are subject to Insurance Business (Bailiwick of Guernsey) Law, 2002 and the Network VEKA cell is required to meet the capital adequacy requirements of Guernsey Law. Policy holders have access to the Channel Islands Financial Ombudsman Scheme, but due to Guernsey being outside the EEA, do not presently have access to the UK Financial Services Compensation Scheme.
10. Some Network VEKA members were also members of FENSA Ltd, another Competent Person Scheme. This was for their own commercial reasons, but recognised by us and FENSA Ltd. This dual membership existed from April 2002, when FENSA Ltd was first established. Since the provision of an insurance backed guarantee became mandatory in April 2014, FENSA Ltd have twice recognised the Network VEKA guarantee which, throughout that period, has been supplied by Mannequin in Guernsey. The Network VEKA IBG was most recently accepted by FENSA on 16 December 2015. A copy of this e-mail is at pages 9 to 11.”
54.	It appears that during 2015 there were discussions between the defendant and Network Veka in relation to the circumstances of their IBG, and whether or not it should be recognised by the defendant. On 13th October 2015 Mr Ogilvie wrote to a representative of the defendant in the following terms:
“With the thought of trying to work constructively it would be appreciated if you could look at the NV IBG again in the light of the latest DCLG draft Conditions of Authorisations.
I am attaching our insurance policy in confidence (all I have deleted is the premium) and you will see reference (in red) to the insurers continuing to meet claims in the event NV was ever to cease to trade.
Our claims triangulation which is regulation reviewed by the Cell managers is designed to ensure there are sufficient funds in the cell to meet all liabilities based on past claims experience within the cell and also before it was set-up.
If you feel it would be helpful I can seek written assurance from VEKA Plc along the lines of staff resource being allocated to administer claims in the event NV was not there.
We feel the proposed Conditions of Authorisations are or would be met by the above and therefore should be recognised by Fensa, thus allowing any of our members wishing to be in Fensa to do so.”
55.	It is clear from the email that recognition of the Network Veka IBG was to enable members of the Assure CPS to have a dual membership with the defendant. In the light of this correspondence Ms Crawford was commissioned to examine Network Veka’s IBG. A review was carried out by Ms Crawford and she reached the following conclusions on 17th November 2015:
“Findings:
Network Veka have a mandatory requirement for their members to provide an IBG via Mannequin Insurance PCC Ltd who are based in Guernsey. The IBG is branded Network Veka. This insurance company sits outside of UK FCA. Clause 5.1 of the agreement states “must comply with all applicable laws and regulations and all relevant codes of practise and guidance in relation to your activities under this agreement including without limitation all and any regulations of the Financial Conduct Authority and/or Prudential Regulations Authority.” Since this company is based in Guernsey it is not covered by the FCA and therefore confirmation of how this company is regulated is requested to allow a comparison to be conducted to ensure the Network Veka demonstrated their independence from Assure, which is the VEKA Group CPS…
Recommendations:
Subject to the confirmation of the regulation controls of the insurance provider and details of how consumer protection is provided it is recommended that Network Veka be recognised by FENSA as an IBG provider for their members who are also FENSA registered. Network Veka will not be added to the public register of approved providers.”
56.	Enquiries were raised following the completion of this audit in respect of what might happen in the event of Mannequin, the protected cell company providing financial protection to the IBG, becoming insolvent. The response which was received was in the following terms:
“Onto your last point, Artex as a licensed insurance manager is regulated by the GFSC under the Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002. Mannequin and the Cell as licensed insurance companies are again regulated by the Guernsey Financial Services Commission (GFSC) but under the same insurance law, regulations, guidelines, code and rules mentioned above and as a licensed insurance company Mannequin cannot cease to trade as long as it has active cells.”
Following the receipt of this and other information Ms Crawford wrote back to Mr Ogilvie in the following terms:
“Please find attached the summary report for the audit that I carried out. Thank you for the follow up details and confirmation of operating practices. I can confirm that Network Veka have been added to the approved suppliers list for the provision of IBG”
57.	Having addressed the audit that occurred Mr Vanstone explains in his evidence the relationship between the defendant and Network Veka, and correspondence from Ms Crawford in which she purported to remove Network Veka (see above) as a registered provider of IBG’s, although in fact they were never listed, as follows:
“11.9 It seems that once JO [Mr Ogilvie] provided further information requested by JC [Ms Crawford] FENSA entered into a hybrid agreement with Network Veka on the understanding that any insurance policy was to be procured under Assure through the Network Veka IBG, meaning that there would be no direct exposure of FENSA. If an Assure member who was also a member of FENSA actually wished to have a particular job processed through the FENSA system it was still required to use an IBG provider on FENSA's approved list, although this rarely happened. The hybrid and one off nature of this agreement also meant that Network Veka was not added to the publicly approved list of IBG providers. I refer again to Exhibit JV8 which is a document that displays the amendments made from time to time to the approved insurance suppliers list.  This does not show any addition or subsequent removal of Network Veka.  I believe that this arrangement came about essentially due to pressure from some installers for permission to use the FENSA logo.
11.10 I do not think that when JC informed JO that Network Veka had been added to the approved list she was referring to approval of Network Veka as a broker as such. My understanding is that FENSA recognised that there were CPS members who were sitting in both the FENSA camp and the Assure Camp and that FENSA recognised Network Veka in the sense that Network Veka members could continue to use the FENSA logo but that any insurance certificate arising from a notification for an installation would come from Assure and any relevant building control checks would be conducted by Assure.  
11.11 I also note that in his witness statement JO does not state that Network Veka was an approved broker but that the Network Veka IBG was approved by FENSA. This reinforces my understanding of the bespoke arrangement that Chris Mayne and JC reached with Network Veka. The fact is that the Network Veka IBG was not being offered to FENSA’s members on the approved list of IBG providers. The agreement merely meant that members of the Assure CPS could benefit from some association with FENSA whilst for all extents and purposes the continued to operate within the Assure scheme. As JO states, this was in fact “only a small handful” of installers.
11.12 Therefore Network Veka was a special case for the reasons set out above. 
11.13 Ultimately, given that I was not involved in this decision/agreement I am unable to comment much further about the Network Veka arrangement. However, I am sure that the Claimants' attempt to analogise itself with Network Veka is a complete red herring. The Claimants' say that the Network Veka was no different to the new model DGCOS adopted. This is not the case. Whilst Network Veka's IBG was based on a cell, its model offered a far greater degree of financial stability. Network Veka operates a closely linked structure whereby the whole business would need to go down before the insurance policy became void. It also had a strong and long standing track record in the industry. To put this simply, Network Veka’s IBG is backed by Network Veka itself, which is a multi-million pound company. For Network Veka to use a protected cell instead of an established underwriter may have made financial sense. DGCOS on the other hand is a much smaller company and does not offer anything like the same degree of financial stability.   
11.14 When JC communicated the Decision to DB, she informed him that FENSA would be removing Network Veka from the approved list of IBG suppliers. This was not something that JC had discussed with me. The first that I heard of this decision was when I was copied into an email to JO on 19 August 2016… JC took the decision to cancel the bespoke agreement with Network Veka without (to my knowledge) any involvement from anyone at FENSA.  I believe JC sent the 19 August email because she understood the basis on which the Decision was made meant that FENSA should not continue the bespoke arrangement with Network Veka. DB had already highlighted what he considered to be differential treatment which may have contributed to JC acting in the way that she did and it was JC’s view that the Network Veka and the SWIG models were essentially the same.  For the reasons set out above that is not in fact correct.  The superficial similarities disguised a very different commercial reality.”
58.	Having examined this evidence I am not at all satisfied that the claimants were in the same position as Network Veka, and that therefore the decision which was reached by the defendant was one in which like cases were not treated alike. There are a number of features of the evidence which in my view lead to this conclusion. Firstly, Network Veka and the Mannequin IBG never featured on the list of approved providers unlike the claimants. The reason for that, which is clear from the evidence, is that the relationship between the defendant and Network Veka was, as Mr Vanstone describes, a bespoke arrangement that was a one-off enabling installers to register with both the defendant and the Assure CPS. Secondly, unlike the claimants, there was no contract and therefore no contractual specification between the defendant and Network Veka. Thirdly, as Mr Vanstone points out (and is illustrated in the second witness statement of Mr Vanstone in these proceedings which exhibits to it financial statements in relation to Network Veka and first claimant) there is a clear and substantial contrast between the financial positions of the claimant and Network Veka. As Mr Vanstone observes, Network Veka was clearly a multimillion pound business with a substantial amount of financial stability providing collateral to the financial protection which it offers. 
59.	Whilst the claimants contend that there have been installations which have been registered with FENSA whilst protected by the Mannequin IBG provided by Network Veka, it is unclear from the evidence that this related to a significant number of installations at the time when the defendant reached its decision. Correspondence prior to the resumed hearing suggested that there were 200-300 installations registered with FENSA using the mannequin IBG before Assure was set up in November 2010. Even taking that at face value it does not add materially to the claimants’ case, since the examination of the rationality of the defendant’s decision must be gauged against the circumstances which pertained at the time. At the time of the decision in question I am satisfied that given the bespoke nature of the arrangement with Network Veka (who were operating their own CPS and with whom it was mutually advantageous to enable installers to have a foot both in the Assure camp and the defendant’s camp), coupled with the substantial financial status of Network Veka there was ample justification for a differential treatment in any event. This coupled with the fact that there was no contract, and therefore contract specification with Network Veka, unlike the claimants, and that the Network Veka IBG has never featured on the approved list of providers there was in my view clear justification for the defendant’s approach. 
60.	The second comparator relied upon by the claimants is IWG. They are one of the 11 insurance providers on the defendant’s approved list. Mr Bond in his evidence on behalf of the claimant, gives as his understanding that the IWG IBG is underwritten by IMA. In his evidence Mr Bond points out that IMA do not have access to the FSCS. In response to this Mr Vanstone points out that if this is true then IWG would be in breach of the conditions of approval which it had agreed with the defendant, and that its description of its IBG was inaccurate and potentially misleading. Because of these concerns and in the light of the fact that Mr Vanstone indicated that the defendant would act swiftly to protect consumers if it were true that they were in breach of the requirement to provide access to the FSCS, the defendant commissioned an insurance expert to provide a report in relation to this issue. At the hearing the court was provided with the expert’s report which states as follows:
“Their website uses the term “composite insurance company” which is an accepted market term to denote a range of insurances across the general insurance and financial services sectors.
The site also states that it is regulated and authorised by both the Isle of Man Financial Services Authority and the (UK) Financial Conduct Authority – Number 142307. This is in line and meets the requirements of Clause 4.9 of your Approved Insurer Provider Agreement.
I have looked at the Financial Conduct Authority (FCA) register of approved companies and Isle of Man Assurance are indeed on this and have been authorised for “regulated products and services” since 1/12/2001 via the predecessor regulatory body the Financial Services Authority (FSA). As such, should it be necessary, policyholders will have access to the Financial Services Compensation Scheme.
The list of regulated products on the FCA register relates purely to the Financial Services side of the authorisation (investments, pensions etc) but you will also note the additional authorisation for “Insurance Mediation”. This is an all embracing term which relates to a firm that offers or sells insurance products or services. The register confirms that the firm is able to undertake insurance mediation.
I am therefore satisfied that Isle of Man Assurance are correctly authorised and regulated in relation to the issue of insurance back guarantees/extended warranties. In fact, IOMA were one of the first, if not the first, insurers to operate in the extended warranty field.”
61.	In response to this report the claimants contend that the expert’s report does not answer the question of whether or not access to the FSCS is provided. The report does not, therefore, resolve their concerns about differential treatment between the claimants and IWG. 
62.	I am not persuaded taking the evidence as a whole in relation to IWG that there has been differential treatment between the claimants and IWG. It is only fair to point out that on the face of the IWG documentation the following is observed:
“This document provides key information about the Guarantee Insurance Policy, underwritten by Isle of Man Assurance (IOMA). If you have any additional questions, then please contact Insured Window Guarantees (IWG). 
IWG is covered by the Financial Services Compensation Scheme (FSCS). You may be entitled to compensation from the scheme if we cannot meet our obligations to you. Further information about the compensation scheme arrangements is available from the FSCS.”
Whilst the claimants are entitled to dispute that claim, firstly, the court is not in a position to resolve the differing contentions between them and IWG (not least because the court has not heard from IWG) and, secondly, the evidence does not show that the defendant has forsaken either its policy on requiring access to FSCS or its contract which requires the IWG IBG to provide access to FSCS. It is clear that once this issue was raised by the claimants active enquiries into the circumstances of IWG were instigated with a view to seeking to enforce the contract. This does not, as Mr Burton points out, provide any evidence of differential treatment on the basis that the defendant has abandoned its approach of requiring access to FSCS. Mr Ward further complains that in the circumstances it shows differential treatment in that IWG have not been suspended. However, on the basis of the material available to the defendant, namely what appears on the face of the IWG policy documentation coupled with their own expert enquiry as to whether or not there has been a breach of the contract, their decision not to suspend IWG is defensible. Clearly, as Mr Vanstone has set out in his evidence, the claimants’ contentions will undoubtedly require careful further scrutiny by the defendant. However, the need for that careful scrutiny in the light of the issues which the claimants have raised in relation to IWG does not in my judgment amount to a demonstration that the decision to suspend and then remove the claimants was irrational on the basis that the defendant have not been treating like case alike. 
63.	The third issue raised in relation to differential treatment was a concern in respect of the defendant’s deposit insurance scheme. In my view the question of deposit insurance schemes is of no relevance to the decision which the defendant reached in this case which was quite specifically related to the financial protection to be offered in respect of an installation so as to cover the risk if the installation failed and the insurance if the installer was insolvent. 
64.	For the reasons which I have set out above I am unable to accept that the decision by the defendant in this case was irrational. Ultimately, the issues in this case arose from the failure of an insurance company. That circumstance threw into sharp relief the financial risk to consumers if there was absence of access to the FSCS to provide them with some form of compensation in that eventuality. In these circumstances the prudence of the defendant requiring in its contract for those on the approved list to provide access to the FSCS was conspicuous and justified. The approach taken by the defendant did not involve them treating like cases differently for the reasons which I have set out above. 
The inadequacy of the defendant’s reasons 
65.	The claimants contend that the defendant’s decision was unlawful as it failed to provide legally adequate reasons for its decisions. It is conceded that, having decided to provide reasons, it was then incumbent upon the defendant to provide reasons that were legally adequate in support of its decision. Mr Ward submits that the defendant’s decision-making process was “murky” and that there had been vacillation in the reasons which the defendant suggested from time to time as being the basis of the decision, such that no adequate reasons had been provided for the basis upon which the defendant reached its decisions. 
66.	Mr Ward draws attention to the fact that in the email written by Ms Crawford on 19th August 2016 it is suggested that the decision to remove the claimants was on the basis that the defendant had decided not to recognise the provision of financial support by the use of the “cell concept”. This was similar to the suggested basis for the decision discontinuing the arrangements with Network Veka. On 24th August the decision reached was said to be based upon failure to fulfil section 4 of the terms and conditions of the contract between the first claimant and the defendant. In the email to Mr Drummond of 31st August 2016 the defendant’s reasons had reverted to reliance upon the fact that the cell structure was the objection which led to the termination of the claimants from the list of IBG suppliers. By the time of the response to the pre-action protocol letter the reasons for the decision had reverted in paragraph 20 of that letter to reliance upon clause 4.7 of the contract and the failure to provide access to the FSCS and cover by the FOS. Thus Mr Ward submits the reasons waxed and waned over the course of time and did not present any coherent explanation as to why the decision had been reached. 
67.	Furthermore, Mr Ward relied upon the case of Nash v Chelsea College of Art and Design [2001] EWHC 538 (Admin) in which Stanley Burnton J drew attention at paragraph 29 of his judgment to the decision of the Court of Appeal in R v Westminster City Council ex parte Ermakov [1996] 2 All ER 302 in which the court observed that great caution should be exercised in allowing evidence which had the function of elucidating or correcting reasons for decisions. The court emphasised in ex parte Ermakov that the function of any evidence after the decision had been reached should be elucidation but not fundamental alteration. It should provide confirmation not contradiction. Stanley Burnton J went on to provide the following observations as to the approach to be taken by the court in assessing late reasons:
“34. In my judgment, the following propositions appear from the above authorities…
(ii) In other cases, the Court will be cautious about accepting late reasons. The relevant considerations include the following, which to a significant degree overlap:
(a) Whether the new reasons are consistent with the original reasons.
(b) Whether it is clear that the new reasons are indeed the original reasons of the whole committee
(c) Whether there is a real risk that the later reasons have been composed subsequently in order to support the tribunal’s decision, or are a retrospective justification of the original decision. This consideration is really an aspect of (b).
(d) The delay before the later reasons were put forward.
(e) The circumstances in which the later reasons were put forward. in particular, reasons put forward after the commencement of proceedings must be treated especially carefully. Conversely, reasons put forward during correspondence in which the parties are seeking to elucidate the decision should be approached more tolerantly.”
68.	On behalf of the defendant, Mr Burton submits that the letter of 24th August 2016 was perfectly clear and focused upon the failure of the SWIG related product to satisfy section 4 of the terms and conditions of the contract between the defendant and UWC. In substance there could be no argument about that proposition: the SWIG product did not satisfy section 4 of the contract since it did not provide access to the FSCS and was not covered by the FOS. He submitted that the references to the “cell concept” (for instance in the emails from Ms Crawford dated 19th August 2016 and 31st August 2016 from Mr Vanstone) were effectively the other side of the same coin as the failure to comply with section 4 of the contract and the absence of access to the FSCS and FOS required by the contract. The existence of the use of a cell in Guernsey had as a necessary consequence that there would not be access to these schemes. As a consequence therefore there was no fundamental difference or waxing and waning of the defendant’s reasoning as suggested by Mr Ward. 
69.	In my judgment, there was no defect or deficit in the reasons which were provided at that time, nor was there inconsistency or incoherence in the reasons bespeaking an unlawful decision-making process. I accept the submission made by Mr Burton that the letter of 24th August 2016 provided clear and adequate reasons to explain to the claimants why the defendant was removing them from the approved list. Further, it is clear to me that the reference to the “cell concept” is clearly interlinked with the absence of FSCS access and ability to use the FOS. What is set out in paragraphs 20 and 23 of the defendant’s response to the Pre-Action Protocol letter is both valid and reflects the conclusions which it is clear that the defendant had reached, namely that the new arrangements involving a protected cell in a jurisdiction which did not have access as the contract required to the FSCS and the FOS could not be acceptable. Whilst Mr Ward has sought to stress that the reasons provided at the stage of the response to the Pre-Action Protocol letter and in Mr Vanstone’s witness statement are retrospective reasons I do not consider that that is an appropriate characterisation of what is set out in those documents. The contemporaneous documentation which I have set out above reflects the approach taken in relation to compliance with the contract and, in particular, that part of the contract relating to financial protection of consumers. 
70.	A subsidiary issue was raised by Mr Ward in relation to Mr Vanstone’s first witness statement. In  that witness statement he stated as follows:
“10.11 In an email of 5 August 2016, DB addressed the query raised by JC by detailing that there was a minimum capital requirement of only above £100,000.00 (page 168 Claimant's Bundle) but did not address the question of what would happen if SWIG collapsed.  Nevertheless, JC emailed both LG and me on 9 August 2016 (attached at JV14) stating that, in her opinion, the risk of exposure to FENSA was low. I did not share her level of certainty.  The capital requirement of £100,000.00+ was in no way adequate to ensure sufficient cover and I was wary of the concept, predicated as it seemingly was on the notion that SWIG would not be allowed to stop trading irrespective of its financial position.  Ultimately, this email did not give FENSA any additional comfort as to the security available in the event that the cell failed…
10.16 As a result of this, and some further discussions, including on the afternoon of 23 August, the decision was made that FENSA could not offer the interim cover until 30 August 2016, as had been envisaged by JC in her email of 19 August 2016 and it should be suspended straight away. The suspension had to be immediate because every installation made after Enterprise’s demise would have had no ultimate safeguard in place for the consumer.”
71.	Mr Ward submits that the reference to a capital requirement of £100,000 plus is derived from Mr Bond’s reference to an absolute minimum capital requirement of £100,000 and the SWIG capital requirement being in excess of £100,000. I do not accept Mr Ward’s submission that the reference to this figure betrays either a failure of Mr Vanstone to understand the material being provided to the defendant by Mr Bond, or that the reasoning process for the decision was “murky” in that the true reasons for reaching the decision had not been disclosed. The key point is to read on in paragraph 10.11 to the final sentence. The concern that was being expressed by the defendant at all times was the need for security to be available in the event that the cell failed. I am also unpersuaded by Mr Ward’s submissions in relation to the absence of detail about the meeting leading to the decision of 24th August 2016 in Mr Vanstone’s paragraph 10.16. For the reasons I have already explained, the basis of the decision is in my view clear from the decision of 24th August 2016, and in those circumstances there is nothing either suspicious or inappropriate in the absence of minutes or other documentation of the meeting of 23rd August 2016, or the absence of any further particularity in Mr Vanstone’s witness statement. For all for the reasons which I have set out above I do not consider that there is any error of law in the defendant’s decision based on the reasons provided for it. 
Failure to make reasonable enquiries in relation to the arrangements which had been put in place following the collapse of EIC
72.	The claimant’s contentions under this heading are that such enquiries as were made by the defendant into the replacement product which the claimants had secured following the collapse of EIC were inadequate and a failure of the duty upon them to make reasonable and proper enquiries about the product which was on offer. It is pointed out by Mr Ward that the enquiries which were made by Ms Crawford led her to the conclusion that the product was one which was satisfactory and should be endorsed by the defendant. He submits that Mr Vanstone and Mr Gilsenan’s rejection of her recommendation, and thereafter rejection of the claimant’s alternative cover, followed from a failure to make any reasonable or appropriate enquiries in respect of those arrangements. In particular, Mr Ward relies upon the reference in Mr Vanstone’s evidence to the £100,000 plus as a failure to make proper enquiries into the product which was available and protection which was afforded by the Guernsey authorities. 
73.	The legal principles in relation to any duty to make further enquiry were set out by the Court of Appeal in R (Khatun) v Newham London Borough Council [2004] EWCA Civ 55; [2005] QB 37. Laws LJ in his judgment, with which the other members of the court agreed, observed at paragraph 35 as follows:
“35 In my judgment the CREEDNZ Inc case (via the decision in In re Findlay) does not only support the proposition that where a statute conferring discretionary power provides no lexicon of the matters to be treated as relevant by the decision-maker, then it is for the decision-maker and not the court to conclude what is relevant subject only to Wednesbury review. By extension it gives authority also for a different but closely related proposition, namely that it is for the decision-maker and not the court, subject again to Wednesbury review, to decide upon the manner and intensity of inquiry to be undertaken into any relevant factor accepted or demonstrated as such. This view is I think supported by the judgment of Schiemann J in R v Nottingham City Council, Ex p Costello (1989) 21 HLR 301 , to which Mr Luba referred us. That case concerned the degree of inquiry which an authority was obliged to undertake into issues of priority need and intentional homelessness. Schiemann J said, at p 309: 
"In my view the court should establish what material was before the authority and should only strike down a decision by the authority not to make further inquiries if no reasonable council possessed of that material could suppose that the inquiries they had made were sufficient."
This approach is lent authoritative support by the decision of this court in R v Kensington and Chelsea Royal London Borough Council, Ex p Bayani (1990) 22 HLR 406 , which was concerned with the authority's duty of inquiry in a homelessness case. Neill LJ said, at p 415: 
"The court should not intervene merely because it considers that further inquiries would have been sensible or desirable. It should intervene only if no reasonable housing authority could have been satisfied on the basis of the inquiries made."”
74.	Applying these principles to the present case I do not consider that it is possible to accept that no reasonable person in the position of the defendant could have supposed that the enquiries that the defendant had made were sufficient. As will be clear from the chronology of events they had made enquiries of the claimants seeking to establish the nature of the new arrangement which they had entered into with SWIG. Those enquiries included requests for further information. As Mr Burton pointed out the difficulty, ultimately, with the claimant’s contention that dialogue should have continued is that they would not have been able to overcome the basic reason for their removal from the approved list, namely that SWIG’s product did not comply with section 4 of the contract in the light of the absence of access to the FSCS and the FOS which is a position which not only continued to persist at the time when the defendant reached its decision but also continued until the conclusion of the hearing. Thus, not only am I satisfied that the enquiries which were made were adequate and appropriate for the defendant to be satisfied that the terms of its contract with the claimants would be breached by endorsing the SWIG product, but also even if those enquiries had continued the defendant’s concerns would not have been overcome. I am therefore satisfied that there is nothing in the claimants’ case in this respect. 
Procedural unfairness preceding the decision to delete the claimants from the approved list
75.	Under this heading Mr Ward submits that whilst there had been some engagement with the claimants prior to deciding to remove them as an approved provider of IBGs from the defendant’s lists the requirements of fairness were not adhered to. In particular Mr Ward contends that it was unlawful for the defendant to fail to put the concerns that led to the decision to delete them back to the claimants so as to enable them to comment upon them and provide a response to the matters which led to the defendant’s conclusion. The requirement to act fairly and provide the claimant with that opportunity to comment was particularly acute in circumstances where the claimants were having to act as a matter of extreme urgency as a consequence of the entirely unforeseeable collapse of EIC. Mr Ward submits that further discussion could have made a difference, for instance in relation to what he characterised as the misconception as to the supposed £100,000 plus capital requirement, a misconception which could have been dispelled if there had been further discussions between the claimants and the defendant. In short, it was unfair to suspend the claimants without providing any proper dialogue. 
76.	I am not satisfied that this submission has merit. The answer to it is similar to the answer in relation to the contention that the defendants were under a duty to carry out further enquiries. The reality is that Mr Bond on behalf of the claimants was fully aware of the potential difficulty with using SWIG in relation to the inability to access the FSCS and the FOS. In his email of 3rd August 2016, having asserted that the policy conditions and limits were the same as the previous policy under EIC, he was careful to point out that the arrangements with SWIG did not include access to the FSCS, and only included access to the Channel Islands Financial Ombudsman. He went on in that email to explain his case in relation to why that alteration from the EIC arrangements should be sanctioned (on the basis that it was not a mandatory requirement of the third interested party and to indicate that SWIG were attempting to obtain consent to access the FSCS). Ms Crawford followed that email with a request seeking further information as to what the solvency arrangements of the cell were, and how a homeowner would be covered if SWIG became insolvent or ceased to trade. These concerns were clearly related to the absence of FSCS protection. That led to further correspondence on 5th August 2016 from Mr Bond seeking, as set out above, to provide reassurance amongst other things on the basis that the authorities in Guernsey would not allow an insurer to fail “rather than providing a limited backup, such as the FSCS, in case one fails.” The reality was that these contentions did not satisfy the requirements of the contract or the concerns which the defendant had. I can see no unfairness in the procedure so as to render the defendant’s decision unlawful. The defendant raised concerns as to the arrangements if insolvency occurred with the claimants and the answer which was provided did not satisfy either their concerns or the specific requirements of the contact which they had with the claimants. In those circumstances in my view there is no merit in the suggestion that the defendant acted unfairly. 
Conclusions
77.	It follows from what I have concluded that, on balance, I am not satisfied that the decision which is the focus of these proceedings is one which was subject to public law and the supervision of this court by means of an application for judicial review. Even were I wrong about that, having scrutinised the detailed Grounds raised by the claimants I do not consider that any of them are made out.  The claimants’ claim must therefore be dismissed.