Appeal court rules adviser is not liable after six-year limit

26 March 2010 8:00 am | By Nicole Blackmore

IFA Philip Shaw was formerly an appointed representative of network Berkeley Wodehouse Associates. Shaw resigned from BWA in December 1999. In April 2002, Lighthouse Group bought BWA and rebranded the network as LighthouseXpress.

In January 2006, the Financial Ombudsman Service upheld an investment complaint from one of Shaw’s former clients, ruling that she had been misadvised and should be compensated £14,585 plus interest.

LighthouseXpress paid the compensation and pursued Shaw for repayment of the full compensation costs.

Torquay and Newton Abbot county court ruled that Shaw must repay the compensation costs, but this has been overturned in the Court of Appeal.

Lord Justice Jacob ruled that because Shaw had a six-year limitation clause in this contract, he was not liable for any costs.

He says: “The liability is to end after the six-year period. The clause is a limitation clause. That makes business sense. It is entirely reasonable for such a person to be free of claims not made within six years.”

A Lighthouse spokesman says: “This case has arisen from a firm acquired by Lighthouse in the distant past and we have no involvement or culpability in the original matter.”

Lighthouse Group said this week that it has made provisions for £3.18m worth of complaints from clients for 2009, up from just £133,000 in 2008.

The company says while its complaint provision has increased markedly, the costs will be covered through professional indemnity insurance and excess payments from advisers. It expects the maximum cost to the group to be around £247,000.

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