Insurance company Quinn Direct has initiated a legal challenge to the powers of the Financial Services Ombudsman to direct the company to refund certain charges imposed on customers over a six-year period.

Mr Justice Peter Kelly yesterday admitted the action by Quinn Direct Insurance Ltd against the Ombudsman, Joe Meade, into the Commercial Court list for July 26th.

Paul Anthony McDermott SC, for the Ombudsman, said the case was effectively a challenge to the powers of his client and his side was consenting to it being heard in the Commercial Court.

Quinn Direct brought the action over a decision by Mr Meade to direct the company to return "administration charges" of €25 imposed on consumers who transferred motor insurance from one vehicle to another. Mr Meade directed that consumers who had paid such charges in the six years prior to his decision of April 2nd, 2007, should be refunded that money within three months.

Mr Meade issued that direction after dealing with a complaint in July 2006 by a customer that Quinn Direct had overcharged him for a motor insurance policy, had charged him administration charges for transferring insurance from one vehicle to another and had also charged him after he cancelled his policy with the firm.

In the April ruling, Mr Meade dismissed the complaints of overcharging for the policy and of charging for cancellation of insurance. However, he upheld the complaint about the €25 charge and directed Quinn Direct to refund the complainant €50.

The change of vehicle charge complaint was upheld on the basis that there was no advance warning of such a charge in the policy documents issued to customers by the company.

Quinn Direct says it accepts the Ombudsman's direction was properly given in relation to the particular complainant and, although it disagreed with the €50 amount of the refund, it was content to pay that sum.

It also said an administration fee was at no time levied in addition to a cancellation fee when a policy had been cancelled.

However, it objects to Mr Meade's decision to direct the insurance firm to identify all change of vehicle €25 charges imposed on customers and to refund those within three months.

Quinn Direct claims the Ombudsman has no power to go beyond individual complaints and that he erred in law and misconstrued his powers in making the direction complained of. It also claims the Ombudsman has no power to address events or conduct predating his taking up office in May 2005.

It says reviewing cases would be an onerous and time-consuming task.