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Court rejects claim against Widows over admin delays

A court has rejected an adviser&#39s claim against Scottish Widows over administration delays on the basis product providers are not responsible to IFAs for negligence if advisers are not placing business with them.

The decision has left the adviser calling for an IFAs&#39 ombudsman to decide on compensation for losses caused by provider bungles.

Hampshire IFA Procrown Investments took Widows to court for £1,400 for 16 hours additional work caused by the IFA having to chase a pension fund payout. But Widows successfully argued it had no duty of care because the adviser was taking away business rather than placing it.

Procrown told Portsmouth County Court that Widows delayed payment of a pension fund of a client wanting to exercise the open market option by six months. But district judge Unwin said although Widows did not “cover itself in glory”, as there was no contract between the provider and the adviser it was not responsible for negligence. Widows had offered an ex gratia payment of £480, which Procrown rejected, based on its assessment of the validity of the case.

Procrown director Barry Painter is calling on the FSA to make product providers liable for their mistakes whether advisers are placing business or not.

Painter says: “There should be a duty for any FSA regulated body to be responsible to other regulated bodies for their actions. There should be an ombudsman for IFAs to whom they can complain when they are caused considerable extra work they cannot justify charging to their clients.”

Scottish Widows media relations manager Susan McDonald says: “Rather than set up another ombudsman we believe there is adequate protection under the court system. Procrown has followed that avenue without success.”


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