The High Court has awarded damages to an investor in respect of negligent investment advice based on an incorrect assumption about the investor's tax domicile.
The advisor was found to be responsible for losses to the investment fund caused by three levels of "unnecessary and duplicative" charges.
These fees would not have been incurred had advice based on domicile information been given. Therefore, the Court assessed the damages to represent the impact upon the value of the fund caused by the unnecessary charges and occasioned by the customer entering into an investment which, with competent advice, she would have avoided.
The Court disregarded the Ombudsman's decision and rejected the suggestion that, as the financial adviser had complied with the statutory code, no finding of negligence could be made. Statutory or regulatory codes are instructive as to the scope of advisors' duties, but compliance with regulatory requirements will not necessarily exclude the Court making its own assessment. Advisors should recommend that the investor obtains independent tax advice if this is outside of the advisor's expertise.
Financial Mis-Selling Quarterly News March 2017
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