Countrywide Assurance is aiming to recover £5.5m it paid out in compensation for pension misselling by its direct salesforce by suing its professional indemnity insurer.
It follows PI insurer Marshal's refusal to reimburse the firm, claiming that Country-wide had paid more compensation than it needed as some clients were compensated even though there was no negligence by its salespeople.
Countrywide aims to recover a £5,000 excess it paid out on 1,100 pension misselling cases. But Davies Arnold Cooper, solicitors for Mar-shall, say compensation is only payable where the advice given by the salesperson was negligent. Marshall also argues that its co-insurers are liable.
Lawyers for Countrywide and Marshall are checking a sample of the misselling cases to see how many compensation payments were made without negligence on the part of the salesperson.
The case is set to be heard in October.
Davies Arnold Cooper associate Graham Brown says: “If Countrywide wrote offering redress to people even where there was no evidence of a failure to give best advice, then there is not a legal liability to pay on the part of the insurance company.”
Countrywide Assured Group managing director Harry Hill says: “I do not want to comment on the case other than to say there is a lot of wriggling going on by the insurers to get out of it. The industry will be watching the decision with interest.”