CLAIMS AGAINST FINANCIAL ADVISORS

Common examples of claims against financial advisors include:

1. Advice to transfer out of an occupational pension or defined benefit pension scheme into an unsuitable alternative product.

• When providing pension advice financial advisors should take care to ensure that they understand their clients’ needs. When doing so they must consider whether it is appropriate, and in the clients’ best interests, to transfer their pension away from an occupational pension or defined pension scheme which often have financially beneficial terms.
• When advising clients to transfer their safe and secure pension into an alternative product, such as a Self-Invested Personal Pension (SIPP) or a Small Self-Administered Scheme (SSAS), the financial advisor must ensure that there is a particularly good reasons for doing so. If there isn’t one, then it is likely that the financial advisor has been negligent.

 

2. Advice to invest into high-risk unregulated investment schemes.

• Financial advisors will often make investment recommendations. Before making any recommendation, the financial advisor should consider the client’s personal position, their attitude to risk and their requirements for the future.
• The financial advisor must always be careful not to recommend investments that are unsuitable. Certain investments are high risk and only suitable for high net worth individuals or sophisticated investors. Notwithstanding this, over the last decade, some financial advisors have promoted high risk investments that were wholly unsuitable for their clients.
• If you have been recommended a high-risk investment, and you have lost money because of it, you may have a claim for negligent advice.
• Misrepresenting the recommended investment, meaning that the client entered into an investment based on incorrect (or sometimes misleading) advice, would also be an example of negligent advice.

 

3. Undisclosed Commissions.

• In certain circumstances, a financial advisor will receive a commission payment for recommending a certain investment or product.
• Where that commission is not declared the client may have a claim against the financial advisor for a secret commission.