In Angela Lenderink-Woods v Zurich Assurance Ltd [2016] EWHC 3287 (Ch), the Court awarded damages to an investor equivalent to the impact of charges on the value of investments when advice held to be incorrect was given recommending those investment arrangements. Although the decision is highly fact-specific, there are some points of more general interest.

Key points made in the judgment include that the Court found:

• the advice was based on an incorrect assumption about the investor’s tax domicile. The Court indicated that an advisor should recommend and obtain evidence that the investor obtains independent tax advice if outside the advisor’s expertise;
• the gift and loan arrangements (and the bond wrapper) did not serve a purpose in this particular case as the investor had no intention of returning to the UK;
• the professional advisor’s duties are determined by the terms of his engagement, and those terms are not to be re-written by the regulatory code. The Judge viewed statutory or regulatory codes as instructive as to accepted standards but found that compliance with regulatory requirements did not exclude the Court making its own assessment of the situation;
• the Judge stated, “[the professional advisor] does not undertake to perform a faultless consideration or to guarantee that his selection will in fact be the best. He engages only to apply reasonable skill and care to the process.”; and
• the advisor was not responsible for the selection of investments or selecting/monitoring the discretionary managers but he was responsible for losses to the fund by the “unnecessary and duplicative” charges – these being three levels of charges:

1. a financial adviser receiving commission,
2. a discretionary fund manager charging a management fee for investing the funds in collective investments which also charged
3. management fees,

which would not have been incurred had advice based on the retainer and domicile information been given.

Therefore, the Court assessed the damages to represent the impact upon fund value of the unnecessary charges occasioned by the adoption of the scheme which with competent advice Mrs Lenderink-Woods would have avoided.

A copy of the judgment is available. http://bit.ly/2i8fAH7