Have you been provided with bad financial advice?

Has your independent financial adviser given you unsuitable advice? You are able to obtain compensation for losses incurred, but there are some issues to consider beforehand. 

Firstly, it needs to be ascertained which FCA entity provided the advice in question. Many independent financial advisers (“IFA”s) are appointed representatives of other FCA authorised firms (a “Principal”). These IFAs do not have their own regulatory permission to provide investment advice and use the Principal’s permission. If a complaint is to be made, it should be made against the Principal. Consideration also needs to be given, if the client was advised to invest in several unsuitable investments, as to whether there were several IFA firms or several Principals involved in providing the advice. It is not uncommon for IFAs to change their Principal or change legal entity, for example from a sole trader to a company or an LLP.

Secondly you need to ask, is there anything which can be done to limit your exposure to the investment which you were advised to invest in. For example, should the investment be sold (if possible) before matters get worse? If so, you will need to be wary that there is a chance the investment may improve. If an investment is going to be sold, the rationale for making the decision should be well documented. Further, it needs to be ascertained if there is another party which may be liable for the loss? For example, did the investment fail because there was fraud? Did a trustee or a bank fail to carry out their jobs properly?

Thirdly, you should ascertain whether the IFA/Principal is still in business. If the IFA/Principal is still in business, then a complaint should be made to the IFA/Principal in question. If the IFA/Principal is not in business, then a claim could be made to the Financial Services Compensation Scheme. The limit of compensation the FSCS will pay out is £50,000 per person per legal entity providing the advice.

Fourthly, you need to ascertain the value of the claim. This will involve assessing the direct losses you have suffered from investing in the unsuitable investment. You should also add to this direct loss, your opportunity cost of investing in the unsuitable investment, i.e. if you had received suitable advice instead of unsuitable advice, what would the investment be worth now? You should also claim any fees for putting right the loss, i.e. professional fees for financial advisers and any other professional fees for seeking compensation. The IFA/Principal has to provide you with a final response to your letter of complaint within 8 weeks of receiving the complaint. If the reply you receive from the IFA/Principal in relation to your complaint is unsatisfactory and the total loss in the claim is under £150,000 then the complaint should be referred to the Financial Ombudsman Service (the “FOS”). If the total loss is over £150,000 then the complaint can still be referred to the FOS, but the FOS is only able to order the IFA/Principal to pay £150,000. If the total loss is much more than £150,000 then consideration should be given to bringing a claim through the courts. This is obviously a more costly option as it is a more formal process which requires more due diligence, also the evidential requirements and burdens of proof are greater.

 We are able to guide you through this process to obtain the compensation you deserve. Contact Financial Services Solicitor, Richard Creed, today on 028 90232303 or rcreed@jmckee.co.uk