Claims Against Negligent
Financial Advisers

While many view the world of financial services and investments as a mysterious one, there is often little choice but to engage with it. Whether a newcomer or seasoned investor, this can be a bewildering experience and considerable faith is usually placed in financial advisers to provide the information, advice and guidance much needed.

Sadly that faith was shattered when, following the financial crash in 2007/8, widespread investigations laid bare both large scale institutional mis-selling and a raft of sub-standard investment advice. As a consequence, and unsurprisingly, the number of claims made against financial advisers and the financial services industry rose dramatically.

In more recent years, however, and following a range of regulatory changes, new incidents of financial mis-selling and mis-management appear to have declined and so too, the claims that they give rise to. But they have not disappeared altogether and nor, given the complexities and uncertainties inherent in many financial investments, are they likely to.

Common mistakes by negligent financial advisers

Some of the common mistakes that can give rise to successful claims against financial advisers are:

  • Failing to correctly assess the risk profile of an investor
  • Selecting investment products or funds with excessive risk
  • Failing to warn of, or mis-representing, the risks associated with an investment product or fund
  • Promoting investments in unregulated collective investments schemes in the absence of a recognised exemption

Even if the firm or practice at fault is no longer trading or has been dissolved, it may still be possible to make a successful claim and recover compensation. The support available to claimants in these circumstances is explained in our article: Claims against closed professional firms and practices

How to claim against a financial adviser

Depending on your personal circumstances and the extent of the loss you have suffered, you may be entitled to make a complaint to the Financial Ombudsman Service (FOS). The FOS can provide an efficient mechanism for resolving low value complaints, particularly ones that are relatively straight forward. However, it is less suitable for large and/or complicated matters.

Otherwise, many claims are commenced by correspondence and by following the procedures set out in the Professional Negligence Pre-Action Protocol. While in some cases it may also be necessary to institute court proceedings, a considerable number of claims are resolved without the need to do so.

Answers to many of the practical questions we frequently get asked about making a claim are set out in our guide: Professional negligence claims: Your key questions answered

Assessing the merits of a claim

While the fact that an investment has not performed as well as anticipated may provide grounds for a professional negligence claim, by itself it is not conclusive. Therefore, before embarking on a claim against a financial adviser, a careful assessment will need to be undertaken of a number of important issues, including:

  • The scope of the legal duties owed by the financial adviser
  • Any actions taken by the financial adviser to comply with those duties
  • The nature and extent of the loss caused by any breaches of those duties

This can be a complicated process and the merits of each claim will often depend on the background events that give rise to it.

Time limits for claims against financial advisers

There are a number of important reasons for acting promptly when a mistake has been made or discovered. One of these are the time limits that apply to all professional negligence claims. These time limits, some of which are easy to miscalculate, are explained in our guide: Time limits for professional negligence claims – FAQs

Specialist legal advice

As professional negligence specialists, we act for clients nationwide to resolve claims against a wide range of professionals, including financial advisers. As you can discover here, the service and advice we provide to our clients is unique in a number of important respects.

If you would like to arrange an initial consultation with us, free of charge or commitment, please do not hesitate to contact us on 0800 195 4983 or by email at mail@pnclegal.com.

We have experience of resolving claims against a wide range of professionals.

Using the links below you can learn more about specific professions and some of the common mistakes that give rise to negligence claims against them.