From the blog: Stories of lost nest eggs and hardship facing investors in tax schemes under investigation by HMRC are never far from the news.
But despite the often huge difference in the amounts involved, the thread that typically unites these stories is poor professional advice or mis-selling based on ignorance or, in some instances, fraud.
Some stories end with a David versus Goliath struggle as those with valid claims fight the advisers’ insurers and their legal teams.
But despite the often huge difference in the amounts involved, the thread that typically unites these stories is poor professional advice or mis-selling based on ignorance or in some instances, fraud.
When someone is out of time will vary depending on their knowledge of the problem. I suspect there are many financial advisers working with an eye on the clock or, more accurately, the calendar
Some stories end with a David versus Goliath struggle as those with valid claims fight the advisers’ insurers and their legal teams. And of course, time.
There is limited time to bring a claim, and this can be a problem for pensions and investment advice as it might be years before problems materialise.
When assessing a claim, the communication between the adviser and the investor will be key in establishing what the individual was told and the risk they were prepared to accept.
If interaction is largely by email, investors should back them up regularly and not risk the consequences of being unable to produce them in the future. Anyone with original paperwork should keep it safe; it might just prove to be the smoking gun.
Whatever the merits of a claim, an investor will still have to establish the causation position: had appropriate advice been given, what would the individual have done, etc.
The courts are also now well aware of parties looking at investment matters retrospectively, often with perfect hindsight. This requires all clients to establish what their mindset and plans were at the time, ideally by referencing documents from the period of the advice.
In their defence, the pensions industry will typically rely on the ‘know your client’ work undertaken by the adviser. This should highlight key things the adviser needs to understand, such as what the investor wanted from their investment, how long it was to run, the likely returns, the risks and the stake.
However, if the adviser cannot produce evidence of such a conversation, it is unlikely they can show justification for their investment advice or indeed whether it was fit for purpose.
The Limitation Act 1980 defines a time limit on bringing a claim, but when someone is out of time will vary depending on their knowledge of the problem. I suspect there are many financial advisers working with an eye on the clock or, more accurately, the calendar.
For anyone with money invested following professional advice, I would remind them that most people do not receive the compensation they deserve because they never make a claim, or wait too long before talking to a solicitor.
Sarah Perry is managing partner and head of the dispute resolution group at law firm Wright Hassall
