A Judge has ruled that an IFA’s client must pay back the endowment misselling redress ordered by the financial Ombudsman Service if their policy matures above the expected level, leaving no shortfall.
In what is thought to be the first case of its kind, a County Court in Wales ordered the client to pay back the awarded sum of £1,689.10 if their policy provides a sum in excess of £13,000 in May 2010.
The original FOS decision was made in September 2007 and retired adviser Eifion Hughes refused to pay, claiming that the ombudsman had come to the wrong decision.
Hughes was taken to court by the client, who was being advised by an IFA acting as a claim-chaser, where the judge upheld the complaint but stipulated that the money would have to be paid back to the adviser on maturity if it reached above its expected value. Hughes also paid the £300 costs.
Hughes says: “At last this appears to be a victory for common sense. If the client loses out and it is the adviser’s fault, he should pay out but if there is no loss and perhaps even an extra gain, why should the adviser have to offer them money? Natural justice has won the day.”
FOS spokeswoman Emma Parker says: “There have been a lot of contradictory rulings coming out of the County Courts recently.
“It would appear that the judge has misunderstood the Financial Services and Markets Act. These judgments are coming out in both directions, some for and some against advisers, and it breeds uncertainty in the industry.”
IFA Defence Union chairman Evan Owen says: “It is refreshing to see the people who administer the law of the land reaching such conclusions. Let us hope that Lord Hunt takes this view on board as part of his review.”