A former client of Kilminster Financial Management has won £190,000 in a court case against the network for neglect of his occupational pension scheme.
The news could be a blow to creditors of KFM, including ex-advisers and shareholders. A creditors’ meeting is scheduled for July 16 to appoint a liquidator for the firm.
David Reid had set up the occupational SSAS for his company, with KFM advising and carrying out administration on the scheme in 1997.
However, the client says KFM failed to do this properly and. after failure to prepare and submit an actuarial valuation report, the scheme was struck off by the Inland Revenue in 2001, leaving it liable to tax. KFM assured the client it would secure reinstatement of the scheme but it was never done.
Kilminster said it was not responsible for the problems, claiming they arose from a member of staff acting so far outside their remit that Kilminster was not liable for the action.
This week, a Bristol court dismissed that argument and ordered the firm to pay the damages within 14 days of the decision.
In June 2007, the FSA fined Kilminster £42,000. One of the failings was that it did not adequately monitor a member of its staff in relation to a small self-administered pension scheme, exposing the firm to a commercial dispute with the SSAS trustees.
Reid says: “We are now on the list as a high-ranking creditor and they have until July 7 to respond.”
A spokesperson for specialist insolvency practitioners BN Jackson Norton, which is overseeing the KFM liquidation meeting, says: “To the best of my knowledge, there are no secured or preferred creditors so they will not be jumping the queue. All creditors will be dealt with as per statute.”
A number of shareholders and ex-advisers of KFM are investigating taking legal action against Malcolm Kilminster over a recent deal to transfer advisers to the Alpha 2 Omega network and further litigation with other creditors is also understood to be taking place.
Kilminster was unavailable for comment.