Retired Taylor Woodrow director wins pension case

A retired Taylor Woodrow director has won a High Court dispute with a financial products provider for giving him unauthorised investment advice on his pension. Henderson J found that a broker employed by Scottish Equitable had advised Michael Walker to move out of a final salary pension scheme, described as “one of the best available in the construction industry”, and into a scheme provided by the Edinburgh-based company. Walker, who worked for the housebuilder for almost 40 years before retiring in December 2000, subsequently ran into problems with the plan and claimed that it was unsuitable given his personal circumstances. He sued for almost £700,000 in compensation. Walker maintained that he would not have gone ahead with the transfer without the advice of his independent financial adviser (IFA), Brett Ellway, and the Scottish Equitable employee, Patrick Boakes. Scottish Equitable denied that Boakes had given investment advice that would, in the circumstances, have been a breach of financial service industry rules, which restricted the advisory role to Walker’s IFA. Allowing the claim, the judge ruled that Scottish Equitable had advised Walker, that the advice was an actionable cause of his decision to transfer and that it should be held liable for advising in breach of the rules. He ordered Scottish Equitable to compensate Walker for all his losses, both past and future, caused by its advice. After the judgment, solicitors for Walker said that they believed that it was the first time that a judgment had been secured against a financial product provider over investment advice and that it was likely to send shock waves through the financial services industry. Adam Epstein, partner at Mishcon de Reya said: “The conventional route in mis-selling cases is to sue the IFA. Suing Scottish Equitable was a bold move on the part of Mr Walker, especially as it is such uncharted territory and as Scottish Equitable were adamant that it had not advised.  “The judgment will provide a timely lesson to both financial advisors and product providers about taking proper responsibility for their contribution to any investment outcome. They must ensure that they treat customers fairly.”     A spokesperson for Scottish Equitable said it is considering whether to appeal. Walker v Inter Alliance Group plc (in administration) and another Chancery Division (Henderson J) 31 July 2007 Javan Herberg (instructed by Mishcon de Reya) appeared for the claimant; Peter Cherry (instructed by legal department of Scottish Equitable plc) appeared for the second defendant.