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IFAs facing threat of split-cap legal action

Lawyers planning to sue fund companies over split-capital investment trusts are now turning their guns on IFAs, alleging misselling totalling £30m.

Solicitors Class Law is targeting up to 30 IFAs on behalf of around 1,000 clients. The IFAs include Hargreaves Lansdown and Whitechurch Securities as well as Barclays Private Clients, NatWest, Brewin Dolphin and PricewaterhouseCoopers.

The law firm is planning claims against advisers on the grounds that they allegedly failed to establish product suitability. Claims against providers or execution-only brokers are based on allegations of misleading marketing material.

But Leon Kaye Solicitors, which is representing investors against fund managers, argues that suing IFAs is pointless as liability should rest with those that created the trusts&#39 prospectuses.

Class Law partner Stephen Alexander says: “We are presently targeting around 20 to 30 IFA firms. It was blindingly obvious these investments were not low-risk and if the IFA did not understand zeros, he should have gone to a stockbroker who did.”

Leon Kaye Solicitors senior partner Leon Kaye says: “IFAs will say they relied on the information sent to them by the split-capital trust companies. Why go for IFAs when you know in advance that their defence will be that culpability lies with the providers?”

Hargreaves Lansdown chairman Stephen Lansdown says: “If a client has a grievance, why do they think they will get a better hearing from Class Law than complaining to us and then going to the ombudsman if not satisfied?”

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