Can I Pursue a Legal Claim for Negligent Financial Advice?
When managing wealth, employing a qualified financial adviser is key - however, despite their professional status they are not immune from making mistakes. If you've been given incorrect financial advice you should be prepared to seek out specialist legal assistance.
Much like solicitors or doctors, financial advisers are bound by professional standards to deliver advice to their clients with a “duty of care”. Failing to uphold such reasonable standards in practice amounts to negligence, a breach of this duty.
How do I know whether I am a victim of negligent financial advice?
To successfully claim financial adviser negligence, you must determine that the financial adviser owed you a ‘duty of care’, that the financial adviser fell below the appropriate standard of this ‘duty of care’ by providing you with faulty financial advice, and that you have suffered a loss as a result of this advice.
Whilst an employed financial adviser will owe you a ‘duty of care’, it is more difficult to determine what constitutes as falling below the appropriate standard of such a duty. Some indicative examples include:
- Providing advice in the absence of knowledge of your latest circumstances;
- Recommending investments of higher or lower risk than ones which you may wish to pursue;
- Failing to illuminate all risks relevant to an investment;
- Providing ill-informed advice;
- Failing to fully highlight the implications of financial investments;
- Failing to consider whether a client may afford investment; and/or
- Misrepresenting the risk of an investment to a client.
If you suspect that you may be eligible to pursue a negligence claim against a financial adviser, it is strongly recommended you seek a solicitor’s aid in assessing factors which may affect the likelihood of your success. Such factors include the scope of an adviser’s legal duties to you as a client, the adviser’s actions with respect to these duties and the cause of the loss suffered by you. The likelihood of success of financial adviser negligence claims will heavily rely on the facts of each individual case.
How much time do I have to file a claim?
Upon discovering a mistake committed by your employed adviser, you are expected to act promptly as financial adviser negligence claims are subject to rules of limitation, i.e. claims of this nature must be made within 6 years of the breach of duty. This may be extended by another 3 years if the breach is discovered after the initial 6 year period.
Despite some courts contemplating the possibility of a continuing duty to correct bad financial advice being imposed on financial advisers, the rules of limitation regarding financial adviser negligence claims remain the same and the limitation period in this type of professional negligence claim remains 6 years.
If you require assistance with any of the issues discussed in this article, you can contact our Commercial Litigation Team on 0161 785 3500 at your earliest convenience.Subscribe to our newsletter
Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.