High Court grants £500k claim against IFA despite Fos award
Judge rules that previous landmark case that found Fos final decision is binding is “wrong” as he grants claim for further damages.
The High Court has ruled that two investors can pursue their IFA through the courts for damages of more than £500,000 despite having already accepted the maximum award from the Financial Ombudsman Service, contrary to a previous ruling which said such awards were final.
In a judgement, dated 19 December, Judge Ross Cranston ruled that investors Barry and Julie Clark can claim further damages from In Focus Asset Management & Tax Solutions despite the firm having paid the maximum allowed £100,000 compensation following a Fos judgment.
However, when the pair completed the Fos’s final decision form, immediately after the words, “our acceptance of the decision”, they added a rider, stating in capital letters: ‘We reserve the right to pursue the matter further through the civil court’, and this was then signed by both of them.
Although the maximum Fos award has since climbed to £150,000, it would have had no impact on this case as the couple claim that their losses were in excess of £500,000 having been mis-sold an endowment policy following the sale of a family business and the sale of business premises.
Trading in these policies was in Mr and Ms Clark’s case “disastrous”, the judge said in the decision.
Mr and Mrs Clark originally issued the proceedings in the county court for damages for what they allege were the greater losses from the “faulty advice” received, but had this original claim struck out due to an earlier landmark ruling that Fos awards are final and further damages cannot be claimed.
The couple appealed this and argued that it should be their right to claim in court for damages to cover what they allege is their full loss despite having accepted a favourable determination of the Fos.
The judgement said that Mr and Ms Clark’s solicitor had completed a witness statement explaining how, on counsel’s advice, he made a mistake of law in advising them in early 2010 to accept the award in the manner they did.
That, the solicitor said, was on the assumption that the previous landmark ruling in the case of Andrews v SBJ Benefit Consultants Ltd is “good law”, a final decision from Fos is bound by it and cannot then bring a civil claim in relation to the same matter.
Judge Cranston said: “In my respectful view the judge in Andrews was wrong to regard the doctrine of merger as applying to the determinations of the Ombudsman.
“The judge below should not have regarded that decision as determinative of the outcome of the appellants’ claim.”