Can I Sue a Financial Adviser?

Jan Samuel  26-10-2017

Financial advisers can be sued for professional negligence, if their standard of service to their client falls below what can be reasonably expected. Financial advisers owe their clients a duty of care, and when that duty is breached, a client can bring a claim for damages to compensate for the losses they have suffered.  

There have been many cases over the years which have clarified what needs to be proved, in order to have a successful claim for professional negligence against a financial adviser.

The 2011 case of Zaki v Credit Suisse reminded solicitors that it was important to be able to prove that the negligent advice from a financial adviser had caused the client's loss. In this particular case, the Judge decided that even if the financial adviser had provided the correct advice to their client, the client would have gone ahead an made the investment anyway. This meant that the claim against the financial adviser failed. 

In the case of Rubenstein v HSBC Bank, the Judge decided that the bank's advice had been negligent. However, the losses suffered by the client were as a result of the 2008 financial crisis and therefore could not be claimed from the bank. This case illustrates that to bring a successful claim for negligence against a financial adviser, the client has to be able to prove that it was the negligent advice, and not market forces, which causes their losses. 

Many negligence cases have been brought against banks who have provided financial advice to clients in relation to interest rate swap products. Many of these products were sold before interest rates dropped, meaning that clients were forced to pay crippling sums to the banks, resulting in many businesses suffering huge losses. The general principle established in cases against banks for interest rate swap product mis-selling is that unsophisticated clients (which covers most small businesses), should not have been sold these complex financial instruments. However, there have been cases more recently which have found that the banks do not have a duty to provide advice to some clients. 

Neglience cases can also arise against financial advisers who recommend products to clients, without considering whether they are the best product available on the market for those clients. In the case of Lenderink-Woods v Zurich the financial adviser was found to be negligent, as he had failed to give proper advice to the client based on where she was living, had told her the wrong level of charges she would incur, and told his boss that the client had received independent legal and tax advice, when she had received none.

If you have been let down by a financial adviser, and have suffered loss as a result of poor financial advice, you should take legal advice straight away. At Samuels Solicitors, we have a niche specialism in dealing with professional negligence claims against all sorts of professionals, including financial advisers. 

Financial advisers should be insured against professional negligence claims, and so the good news is that they should be able to pay an order for damages or costs against them, without you having to take enforcement action. 

If you have particularly strong claim, we may be able to act for you using a conditional (no win no fee) agreement. 

If a financial adviser has been negligent and caused you loss, contact us today for a free discussion about the next steps you need to take.

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