The Financial Services Compensation Scheme has lodged an appeal against a landmark High Court ruling relating to how the scheme assesses compensation claims for poor advice.
The original case was brought by Charmaine Emptage, who was advised by Berkeley Independent Advisers mortgage broker Peter Sharratt to exchange a £40,000 repayment mortgage for an interest-only mortgage of more than £111,000. She was also advised to invest over £70,000 in Spanish property.
She took her claim to the FSCS after Berkeley went bust and the Spanish property bubble burst in 2009.
After initially rejecting Emptage’s complaint, the FSCS awarded Emptage £11,522.98 in December 2010, saying it would only award compensation in respect of the mortgage advice and not on losses associated with the Spanish property purchase as this was an unregulated transaction.
But last month High Court judge Mr Justice Haddon-Cave ruled the FSCS “failed to view Sharratt’s negligent advice as an indivisible ‘package’”. He said Emptage should be put back in the financial position she was in prior to the unsuitable advice and ordered the FSCS to pay her legal costs of £150,000.
The judge noted the case may have implications for other similar cases.
The FSCS lodged an appeal yesterday.
A spokesman for the FSCS says: “The FSCS has decided to appeal against the decision in the case of Ms Emptage following a careful review of the judgment and in the light of legal advice.
“We believe we acted properly and according to our rules. We cannot comment further at this stage.”
Financial Escape director Phil Castle says: “I cannot see how the judge came to the conclusion he did, and there has got to be an element of caveat emptor here. The FSCS is doing the right thing by appealing.”