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IFAs seek legal advice on misselling responsibility

A group of 180 small IFA firms has put together a fighting fund and is consulting a top barr- ister in a bid to put responsibility for marketing material on product providers.

The IFAs are asking Anth-ony Speaight, QC, to examine if they have a case to argue that product providers breached contracts with advisers with marketing material used in sales of precipice bonds, endowments, with-profits and split-capital products.

The advisers want providers to take responsibility for the material that they believe could have contributed to missales of products. They want to examine the basic principle of why IFAs are held responsible for material created by providers.

The group is convinced that bigger IFAs will not support its cause and think individually they will not stand a chance against massive life insurance and investment companies.

The advisers are ready to pay thousands of pounds for the opinion of Speaight, who is an expert on contract law and financial services. They want to stay anonymous due to fears that providers could strike them off their sales lists and the FSA may brand them as troublemakers. The bid is backed by the IFA Defence Union.

Last week, it was revealed that the FSA had told former Aifa director general Paul Smee that advisers were being held responsible for any material if it was used or referred to in a consultation, if it was used “as is” or if any part of it was reproduced.

A spokesman for the IFAs says: “We have been gathering opinions from legal and actuarial experts as well as questioning the FSA. The evidence strongly suggests that IFAs have a case for misrepresentation of risk against providers with many products. IFAs cannot be held responsible for misrepresentations made by either party, they have been the whipping boys for far too long.”

Personal Finance Society public affairs director John Ellis says: “We would very much support anything that throws a bit of light on this subject. You cannot have providers issuing material that is basically misleading but any legal approach has to be done in a level-headed way.”

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