Your Industry  

Your Shout: Letters to the editor

Financial Adviser Letters

Financial Adviser Letters

There are plenty of lawyers who bring claims against advisers without really knowing the fundamentals, and the view of the Financial Ombudsman Service on an issue can be very different to the position that the court takes. 

Given the increase in claims against advisers it is still worth remembering that there is a significant difference in terms of the approach of the court compared with the Fos. 

It is usually much harder to persuade a court that a claim is valid – and more cases are lost than won. 

The court does not determine cases based on what is ‘fair and reasonable’, and each case is dealt with on its facts. There are no hidden biases or preconceived notions of blame.   

In court, to establish legal liability on a mis-selling claim, the usual routes are claims for breach of statutory duty, breach of contract and negligence.  

To win a case for breach of statutory duty the claimant has to show breach of a specific FCA rule (for example Cobs 9.2): so simply pointing to an FCA principle of business or some guidance and saying the adviser didn’t comply is not enough. 

If you cannot show breach of a specific rule it will be difficult to show that the advice was nonetheless a breach of contract, or that it was negligent (that the advice given was advice that no reasonable adviser could give).  

But negligence can potentially extend the time period within which a claim must be brought – usually six years – which is often why it is claimed.  

In the article it appears the claims also involve allegations of dishonesty.  

That is more eye-catching than simply saying an adviser got it wrong, but it is usually an indication that there is a limitation issue to be overcome and that the claims date back a number of years.  

Fraud will also extend the time period for issuing proceedings so it runs from when the fraud was or could reasonably have been discovered. 

But fraud is notoriously difficult to prove. If the allegation in the case is that not only the adviser but all the other companies listed also acted dishonestly then that is going to be a very high hurdle to get over, and, on the face of it, is inherently improbable. 

It will take some very compelling evidence to persuade a court that this is in fact the case. 

And if a claimant can prove liability it still has to establish that the breach in fact in legal terms caused the loss that is claimed. Again that is often much more difficult to show than it might at first appear.