Claims against financial advisers
DMH Stallard’s professional negligence solicitors specialises in advising businesses, directors, trustees and private individuals on financial adviser negligence claims in England and Wales. Our lawyers focus on giving clear, practical advice from the outset: whether you have a viable claim for negligence, what it may be worth, and the most effective way to pursue recovery.
If you have suffered a financial loss because a financial adviser recommended an unsuitable investment, pension arrangement or financial strategy, you may be able to bring to instruct a negligence solicitor to pursue a claim against your financial adviser (or their firm) to recover compensation and losses. Poor or negligent advice can have long-term consequences: retirement plans put at risk, avoidable tax exposure, illiquid or high-risk investments, unnecessary charges, or a portfolio that is fundamentally misaligned with your objectives and appetite for risk.
What constitutes professional negligence by a financial adviser?
Financial advisers are expected to act with reasonable skill and care and to provide advice that is suitable in the circumstances. A negligence claim usually arises where the advice or service fell below the standard expected of a reasonably competent adviser and that failure caused a measurable loss.
The scope of the duty will depend on the nature of the retainer and the services provided. Some advisers are instructed to give holistic advice, whereas others are asked to advise on a specific product or transaction. A common feature in many cases is a failure to properly understand the client’s position and goals, or a failure to explain and document the risks and alternatives in a way that enables an informed decision.
Common examples of financial adviser negligence
Financial adviser claims can arise in many contexts, including pensions, investments, protection products and tax planning. Typical allegations against a negligent financial adviser include recommending investments that are too high-risk for the client’s risk profile, capacity for loss or time horizon, or placing clients into complex products without proper explanation of cost, liquidity and downside risk.
Our lawyers also see claims involving unsuitable pension transfers (including transfers out of defined benefit schemes), inappropriate drawdown strategies, concentration of risk (for example, placing too much into a single asset class or unregulated/illiquid investments), and failures to diversify or to rebalance when circumstances change. Other scenarios include failures to advise on the tax consequences of transactions, failures to warn about early exit penalties or long lock-in periods, and failures to carry out adequate due diligence on products or counterparties.
Not every investment loss means the adviser was negligent. Markets move and some risk is inherent. The question is whether the adviser’s work met the required standard and whether the loss is attributable to any failing, rather than to ordinary market fluctuation.
To successfully bring a professional negligence claim against your financial advisor, you will need to establish a duty of care, breach of that duty and causation of loss. If you can’t satisfy these requirements its unlikely that your claim will succeed.
Time limits for bringing a claim
Limitation is often critical in professional negligence claims and should be assessed early.
In broad terms, a claim founded on contract must generally be issued within six years from the date the cause of action accrued under section 5 of the Limitation Act 1980. A claim founded in negligence (tort) must generally be issued within six years from accrual under section 2.
Where the relevant facts were not known at the time, certain negligence claims may benefit from an alternative time limit of three years from a “starting date” based on knowledge, if later than the six-year period, under section 14A. There is also an overriding 15-year longstop for certain negligence claims not involving personal injuries under section 14B.
Limitation is fact-sensitive. Where time is tight, parties sometimes agree a standstill while pre-action steps are followed. The pre-action professional negligence protocol recognises that a claimant may request a standstill agreement, or may issue proceedings and invite an immediate stay so that the protocol steps can still be followed.
The process for making a claim against a financial adviser
Our negligence solicitors will usually begin by reviewing key documents, such as the engagement terms, fact-find/risk profiling materials, suitability reports, key features documents, policy documentation, and correspondence. We will also look at the transaction history, performance data, and the timeline of what advice was given and when.
At an early stage our lawyers will also consider whether expert evidence is likely to be required, for example in relation to the standard of advice, suitability, and quantification of loss.
Professional negligence claims against financial advisers are commonly expected to follow the Pre-Action Protocol for Professional Negligence, which sets out a recognised framework for pre-action conduct. It includes a Preliminary Notice, a detailed Letter of Claim, a period for investigation, and a Letter of Response (and/or settlement proposals) within the protocol timetable.
The Protocol is designed to help parties identify the issues, exchange key information and documents, make informed decisions and, where possible, settle without proceedings. The courts treat the standards in the Protocol as the normal reasonable approach, and sanctions may be imposed for substantial non-compliance.
Many financial adviser negligence claims settle without trial once liability and valuation are properly set out. The Protocol emphasises that litigation should be a last resort and encourages parties to consider ADR (including mediation) where appropriate.
Where a settlement cannot be achieved, you may need to issue court proceedings. Our negligence solicitors can advise you on the appropriate course of action, evidence needed and provide an expert strategy based on the value and complexity of your claim to help increase your chances of success.
If settlement cannot be achieved, court proceedings may be required. Our lawyers can advise on the appropriate causes of action, evidence and expert strategy, and a proportionate approach aligned with the value and complexity of the claim.
The aim is usually to recover damages that, so far as money can, put you back in the position you would have been in had competent advice been given. Depending on the facts, losses can include capital losses, lost growth (where appropriate), and the costs and charges associated with unsuitable products or strategies. In some cases, a negligence claim may also involve recovery of professional fees and other reasonably incurred consequential losses, where legally recoverable and properly evidenced.
In High Court proceedings, the court has power to include simple interest on debts and damages for relevant periods under section 35A of the Senior Courts Act 1981.
Why instruct DMH Stallard for a financial adviser negligence claim?
Bringing a claim against your financial adviser can be complicated and requires expert legal guidance to ensure careful analysis of the documentation, the advice process and to consider the alternative course of action available at the time. Our lawyers will work with you to build a clear causation narrative and thorough evidence-led valuation to help you make an informed decision on the settlement and consider the merits of pursuing a professional negligence claim.
If you believe you might have a professional negligence claim against a financial adviser, speak to one of our negligence solicitors today for clear, confidential advice on your options and next steps.
Our laywers have offices in London and across the South-east including Gatwick and Crawley, Hassocks, Horsham, Brighton and Guildford.
If you believe you have a professional negligence claim against a financial adviser then get in touch with of our specialist lawyers for clear, confidential advice on your position and next steps, via our online enquiry form or call on +44 (0) 1293 558529.
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