IFAs can be personally sued for advice after lea-ving a firm even though they gave the advice in the capacity of an employee following a House of Lords decision this week.
The judgment is not open to appeal and means that IFAs must face up to exposure to personal liability where any firms they have worked for do not have sufficient cover to meet all claims.
The Court of Appeal judge who made the original decision recomm-ended that advisers should take out personal run-off cover but IFAs say there is currently no such PI product on the market.
Despite the fact that the case concerned a surveyor previously employed by a now insolvent company who found himself personally liable for a mortgage valuation he had carried out seven years earlier, ind-ustry lawyers say the ruling applies to all employees who provide specialist advice, including IFAs.
The surveyor's solicitor CMS Cameron McKenna senior assistant Martin Davis says: “Advi-sers should find out det-ails of their employer's cover. But at present there is no PI product to cover this.”
Aifa director general Paul Smee says: “At first sight, this judgment does not seem reasonable. We will continue to work with other trade bodies on this and other judgments surr-ounding the area of liability for advice.”