The complexities of financial advice can be bamboozling, particularly for the elderly, but one High Court case – in which a 96-year-old woman won more than £220,000 in damages in respect of negligent advice – strikingly showed that expert legal support can assist in achieving a just settlement.
The woman, who was domiciled outside the UK, had inherited a portfolio of low-risk investments from her mother that by 2001 was valued at £567,700. With a view to achieving capital and income growth, and minimising Inheritance Tax liabilities, she obtained advice from a financial planning consultant who was a 'tied agent', representing a single life assurance company.
On his advice, she invested her portfolio in a number of the company's financial products. They were unsuitable for a person not domiciled in the UK and performed poorly over a number of years. Any growth in her fund was eaten up by unnecessarily burdensome commissions and charges. Following a series of mergers, the company with which she originally invested changed ownership and she launched legal proceedings against the new owner.
In upholding her claim and ordering the company to pay her £223,000 in damages, the High Court found that the consultant had fallen well short of competently discharging the duty that he owed her. Every word that he wrote or uttered showed that he had misunderstood the crucial importance of her domicile, did not know the relevant rules and was completely out of his depth. His shortcomings were compounded by the failure of the company he represented to ensure that she had received independent tax advice.