Can an individual IFA be sued personally?

eqgardener

I would be very grateful for some advice on behalf of a friend.

In short, he has had legal advice, and been told that an IFA working for one of the networks was negligent in the advice which he gave. However, the network is one of the ones which has gone bust, so he can't bring a civil claim against the network. Apart from a complaint to the Ombudsman, can my friend sue the IFA personally, as the individual IFA was professionally negligent? Obviously if he decides to go ahead he would use specialist lawyers, but he has asked me for some advice first.

Any advice or experience would be grateful received.

dunstonh

In short, he has had legal advice, and been told that an IFA working for one of the networks was negligent in the advice which he gave.

This is key. The Network have the liability for the IFA. They in turn will require the IFA (or their insurer) to pay the network. Although in reality the insurer will usually pay direct to the individual with the excess paid by the IFA.

However, the network is one of the ones which has gone bust

This is also key as it means neither the IFA or the network hold the liability any more.

Apart from a complaint to the Ombudsman

He cannot complain to the FOS as the FOS can only deal with firms that are still regulated or hold assets.

can my friend sue the IFA personally, as the individual IFA was professionally negligent?

The IFA was a representative of the network. The legal entity to take to court is the network. Network doesnt exist.

If the advice in question is investment related and an activity regulated by the FSA and took place after August 1988 then a complaint can be made to the FSCS. If it was prior to that or is not a regulated activity then its game over.

magpiecottage

dunstonh wrote: »

The IFA was a representative of the network. The legal entity to take to court is the network. Network doesnt exist.

This time last month I would have agreed with Dunstonh.

However, if you look here, it has just been done.

That does not mean it is necessarily worth doing.

It is possible the adviser was an employee of the network member -in which case the employer is likely to be liable.

The network member may itself be a shell - a limited liability business with no assets of its own. That will at best produce a hollow victory.

There is also the question of whether the advice really was negligent, when it was given and when the complainant became aware that he had cause for complaint.

The courts are far stricter on the application of timebars than FOS.

Annisele

What was the IFA's advice about, when was it given, and why do you think it was negligent?

I ask because, whilst it's a *very* long shot, sometimes advisers work for two different companies. Sometimes they're appointed reps for some of their business, and trade through an entirely separate company for their other business (which in the circumstances I'm thinking of tends to be dodgy Spanish off-plan properties that never get built). In the highly unlikely event that's the case, the network might have nothing to do with it.

However, if I were your friend I'd be hoping the network was responsible, and that it was something I could take to FSCS.

eqgardener

Thank you all very much for your replies. I am not entirely sure what the circumstances or type of advice given was - I was just asked about the potential liability. You've all given me a lot of food for thought though, and some sensible advice to pass back.

I had thought it was going to be a bit more simple!