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A&M warning to advisers

IFAs could face misselling claims if they fail to advise clients to amend trusts during the Chancellor’s two-year grace period, warns Fishburns Solicitors.

Speaking at the Fishburns financial advice seminar in London last week, solicitor Harriet Quiney said that Gordon Brown’s recent attack on accumulation and maintenance trusts creates significant legal risks for solicitors, accountants and advisers.

She said that the introduction of periodic and exit charges on existing trusts means that advisers will have to be active in ensuring that clients amend the trusts before April 2008 or risk the wrath of the FSA.

She also said that people with limited life expectancy should be advised to review their wills immediately to ensure beneficiaries are not left with unexpected tax charges, and advisers are not left with claims.

Quiney said: “Two years seems like a long time but firms will need to contact all clients who have set up accumulation and maintenance trusts to ensure that they are aware of the changes and to provide advice going forward. If firms fail to contact clients then it is inevitable that claims will follow.”

Fishburns partner Andrew Davis also spoke at the event to give a legal warning over the anticipated raising of the 100,000 limit for Financial Ombudsman Service awards, suggesting it could lead to professional indemnity insurers moving out of the sector.

An announcement over the rise is expected in the next few weeks and Davis said that the higher the limit rises the harder it will be to accept the decision making criteria of what is “fair and reasonable” when legal principles are being overridden.

Davis said: “One has to question whether a higher award with no improvement on the forensic investigation of complaints will cause disproportionate un-fairness.”


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