Professional Negligence

Alan Shearer resolves dispute with his Financial Adviser
21 June, 2017

Alan Shearer famously donned the striped shirt of Newcastle United. It appears, however that when it came to his pension, things were far from black and white.

Earlier this week Shearer reached a settlement with his former independent financial adviser and pension provider Suffolk Life. The terms of the settlement are not known.

Shearer alleged that he had received negligent advice in connection with a pension investment in British Virgin Islands fund Fortress International Fund Ltd. The claim was apparently valued at £9m.

As has been seen in the widely reported film tax deferral/avoidance scheme cases, being a celebrity or a high net worth individual does not necessarily mean that you are financially sophisticated. Such individuals are as reliant on the quality of their advisers as anyone else.

The Match of the Day pundit claimed that his adviser gave negligent advice and took advantage of his “limited knowledge or experience” of investing.

Under the rule 9.2 of the Conduct of Business Rules contained within the FCAs Handbook. A recommendation from an adviser to make an investment must be suitable for the client.

As part of the assessment of suitability, an adviser must not solely focus on whether the client has the ability to bear a loss. The assessment must also take into account the client’s understanding of the risks involved in the transaction with particular reference to their relevant knowledge and experience.

If you have suffered losses as a consequence of defective financial advice or services please contact Pradeep Oliver at or call 01892 765453 for a no obligation consultation.

What’s in my Pension? – The role of DFMs in pension fraud
20 June, 2017

Customers who have their pension funds held under management

with Strand Capital Limited will be understandably concerned at the recent collapse of the discretionary fund manager (DFM). The reasons for Strand’s collapse have not yet been confirmed. However it serves as a timely reminder for financial advisers and wealth managers to ensure that proper due diligence is undertaken on the DFMs that they are recommending to their clients.

The role of DFMs in pension fraud has been highlighted by the FCA earlier this year. The FCA warned advisers that pension scams had evolved to become increasingly sophisticated. The alert identified that “Third-generation scams now use the services of a discretionary fund manager to create an investment portfolio that does not require the direct input of the investor; this portfolio then invests in special purpose vehicle (SPV) bonds. The reason for this evolutionary process appears to be to obscure the nature of the ultimate underlying investment”.

The FCA explained the evolutionary process that pension liberation has undergone.

First-generation schemes offered unregulated physical assets (such as commercial property for direct investment).

Second-generation schemes obscured those underlying unregulated physical assets by creating a special purpose vehicle (SPV) to acquire them using funding raised by the issue of corporate bonds.

It appears that now discretionary fund managers are being used to hide the fact that an investment portfolio can be concentrated in high risk and illiquid assets. A client would not necessarily know what underlying investments are held in his or her pension, particularly as the pension valuations often provide very little detail other than to identify that a portfolio is under the management of a DFM.

If you have suffered losses as a consequence of defective financial advice or services please contact Pradeep Oliver at  or call 01892 765453 for a no obligation consultation.

FOS report an 34% increase in SIPP/SSAS Complaints in 2016/2017
19 June, 2017

The Financial Ombudsman Service (FOS) has reported it handled 5,160 pension complaints in 2016/2015 which represents a 15% increase from the previous year. The biggest rise was in respect of complaints connected to small self-administered schemes (SSASs) and self-invested personal pensions (SIPPs). There were 1,574 such complaints, representing a 34% annual increase.

Perhaps, this is an unsurprising statistic.

SIPPs and SSASs are types of personal pension that allow a person more freedom and control over their pension pot. SIPPs are designed give experienced and sophisticated investors flexibility to determine precisely how their pension pot is invested.  SSASs are particularly well-suited for business owners who are looking for a way to make the most of existing or future pension funds to support their company.

In recent years, and particularly after the pension freedom reforms announced in 2015, there has been a worrying number of retail customers who have been persuaded to transfer their pension pots out of traditional pension plans and transfer into risky, illiquid and speculative non-standard investments (NSIs) held within their SIPP or SSAS.

On 22 May 2017, the Serious Fraud Office announced that it has opened an investigation into the Capita Oak Pension and Henley Retirement Benefit schemes, Self Invested Personal Pensions (SIPPs) as well as other storage pod investment schemes. The investigation includes the Westminster Pension Scheme and Trafalgar Multi Asset Fund which invested in other products. The amounts invested total over £120m.

A NSI is an investment which FCA does not consider to be a “standard investment”. The Financial Conduct Authority’s (FCA) current list of “standard investments” contains assets that are easy to value and liquid. These include; deposit accounts, London Stock Exchange & Alternative Investment Market listed shares, Government and local authority bonds, corporate bonds and unit trusts.

NSI’s can take various forms from commercial property schemes and overseas property developments to carbon credits and storage pods. Common features are that the investments are;

  • speculative
  • unregulated
  • illiquid
  • hard to value
  • difficult to sell because there is no recognised secondary market

By their nature pension investments are long term. The problem for an investor is that many years can go by before the true difficulty of an investment can come to light. Because NSIs are difficult to value, the valuations received from a SIPP or SSAS provider will not usually identify a true market value but a “book value” placed on the investment by the provider, therefore an investor could be sitting on a valueless investment and not even realise it. It is therefore important that advice is sought at the earliest possible opportunity.

If you have suffered losses as a consequence of defective financial advice or services please contact Pradeep Oliver at  or call 01892 765453 for a no obligation consultation.

Tax mitigation schemes – Beware of time limits
15 June, 2017

The recent decision in Halsall & Ors v Champion Consulting Ltd & Ors (Rev 1) [2017] EWHC 1079 (QB) (19 May 2017) makes interesting reading on a variety of issues.


The Judgment will be of particular interest to clients considering bringing an action against their tax or financial advisers for negligent advice to invest in film schemes.

The HMRC have successfully challenged the structure of film partnership sale and leaseback schemes in several high profile cases. The revenue also continue to pursue the individual members of these schemes not only for a return of the tax relief that was originally received but also for additional tax on income the members have never physically received, so called “dry tax”. 

The claimants were partners in a firm of solicitors. The defendants, an accountancy firm, were all part of the Champion group.  

The claim involved alleged defective tax advice to enter into 2 tax mitigation schemes, a “charity shell scheme” and a “Scion” film scheme.

In a fairly lengthy judgment, HHJ Moulder sitting in the London Mercantile Court found that claims succeeded on liability and causation but ultimately failed on limitation.

Scion Film Scheme

The Court agreed with the claimants that advice was provided and found that the defendants represented and advised the claimants that there was a 75% chance that the Scion film scheme would successfully mitigate the claimants’ liability to tax.

The claimants’ expert witness placed the Scion film scheme at the high end of the risk scale and that a reasonably competent adviser would not have placed the prospects at more than 50%. The defendants’ expert witness concluded that the prospects were in the region of 60-75%.

HHJ Molloy preferred the evidence of the claimants’ expert concluding that the advice of the defendants’ employee that the prospects of success of the film scheme were 75% was outside the range open to her and amounted to a breach of duty being advice such as no reasonably well-informed and competent member of that profession could have given.

As in all advice cases, each case involving film schemes will turn on its own facts including; the specific advice provided, the environment at the time of the advice and the precise structure of the scheme.

The Court in this case was prepared to find that the Scion scheme had a higher percentage chance of failure than was represented by the adviser.

The sting in the tail was limitation.

Proceedings had been issued by the claimants in March 2015. HHJ Moulder confirmed the position as set out in a line of authorities, that the cause of action in negligence accrued on the date that the claimants entered into the contractual documentation for the film scheme in July 2007. At that point the “defect” in the form of the advice was incapable of cure and they were tied into the “commercial straightjacket” (paragraph 344 of HHJ Moulder’s Judgment). To be within the primary limitation period under section 2 of the Limitation Act 1980, proceedings were required to be brought within 6 years (i.e. by July 2013).

The claimants relied on s14A of Limitation Act, which allows 3 years from the claimants “date of knowledge” to bring a claim. The test as stated by the Court was “at what point did the claimants know enough for it to be reasonable to begin to investigate further. The claimants do not have to know for certain that the scheme would fail, the claimant must know enough for it to be reasonable to begin to investigate further; there needs to be something which would reasonably cause the claimants to start asking questions about the advice they were given in relation to the Scion film scheme.” (paragraph 350 of HHJ Moulder’s Judgment).  

The Court found that in June 2011, as a consequence of correspondence that the Revenue did not accept that the claimants were due any relief and that they had a number of grounds for challenging both the losses and the relief claimed. The implications were explained by the defendant that HMRC were offering only to allow their 20% contribution as loss relief. The judge concluded that there was no need for the claimants to consult “experts” in order to understand the position. They did not know for certain that the Revenue’s position would prevail but they knew enough for it to be reasonable to begin to investigate further.

The application of s14A is fact specific and depends on a variety of factors relevant to the Court assessing when a claimant became aware that there was something which would reasonably cause the claimant to start asking questions about the advice they were given.

The decision should be seen as a warning sign to any claimant considering bringing a claim against their adviser. It may seem reasonable for a potential claimant to wait until HMRC investigations or negotiations are finalised prior to considering bringing a claim, after all the extent of the losses suffered may be currently unclear. This Judgment highlights the acute danger in this approach and the prospect that a good claim may ultimately fail due to being brought out of time.

Any claimant with a potential claim against an adviser should seek advice as a matter of urgency.

If you have suffered losses as a consequence of defective financial advice or services  please contact Pradeep Oliver at or call 01892 765453 for a no obligation consultation. 

FCA seize over £2M from fraudsters – Involved in land banking investment fraud
12 June, 2017

In May 2017, FCA succeeded in securing confiscation orders in respect of the last 2 perpetrators of a multi-million pound land investment fraud.

A total of £2,195,496 will be confiscated from eight defendants. The eight defendants are Scott Crawley, Brendan Daley, Daniel Forsyth, Adam Hawkins, Ricky Mitchie, Ross Peters, Aaron Petrou and Dale Walker, a solicitor who operated his firm, Dale R. Walker Solicitors in Sevenoaks, Kent.

HHJ Leonard QC sitting in the Central Criminal Court has directed that all sums confiscated from the Defendants be paid by way of compensation to the victims of their crimes. Those who have suffered loss should expect to receive just over 40% of the capital amount owed to them.  The fraud was a collective investment scheme operated through 3 companies: Plott Investments Ltd (later known as Plott UK Ltd), European Property Investments (UK) Ltd and Stirling Alexander Ltd.

Unregulated sales people cold-called customers to sell them agricultural land that the companies had bought for minimal amounts as well as land the companies did not actually own.  More than £5 million was extracted from investors to buy land at a vastly inflated price.

The action of the FCA in pursuing the perpetrators of investment fraud is to be applauded. It is hoped that the prospect of criminal sanctions will have a deterrent effect and enhance consumer protection.

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