Independent financial advisors are regulated by the Financial Services Authority and are bound by a code of conduct. The FSA (Financial Services Authority) was established to protect the rights of investors and to ensure that finance professionals act with integrity by providing sound, honest and suitable financial advice to clients. In cases where negligence arises, it may be possible for the affected client to make an IFA professional negligence claim .

Choosing a regulated firm

The FSA provides a helpful register of FSA-regulated firms and individuals .

Choosing an independent financial advisor (IFA) who is regulated by the FSA is an important first step to ensuring the right advice.

Making a complaint

All IFAs should have a stringent and client-friendly internal complaints process. Sadly, however, this is not always the case. Those clients who receive no satisfaction from the internal complaints procedure may take their cases to the Financial Services Ombudsman , which will, if necessary, conduct an independent investigation and award compensation where appropriate.

Proving negligence

Losing money on an investment does not in itself prove negligence or give grounds to a successful compensation claim. Even if an investment has lost significant value, if an IFA has followed the financial regulator's code of practice, acted competently and represented the client's best interests in an honest and suitable way, there will be no grounds for an IFA professional negligence claim.

In general terms, the test for IFA negligence is whether the advice was of a standard that would be expected of a reasonably competent and diligent professional. Furthermore, for a claim to proceed it must be proved that the client suffered significant financial loss.

All IFAs have a duty of care to their clients. As such, if they falsely or negligently represent their services and the terms of investments, clients may have grounds to recover any consequent losses.

The following are some examples of cases where valid grounds for a negligence claim against an independent financial advisor may arise:

• If an IFA fails to disclose its own financial interest in a transaction or recommendation, such as receipt of payment or commission for the selling of particular services;
• Where the investment has been misrepresented, leading the client to take a decision based on incorrect information;
• Where the advice has been unsuitable to the individual client, whose requirements have not been considered;
• If the IFA has offered unrealistic guarantees on an investment's performance;
• If the IFA did not fully explain the risks involved;
• If the IFA did not disclose a conflict of interest.

Advice on IFA negligence claims

The professional negligence lawyers at Healys work to ensure that clients receive clear and in-depth advice about proceeding with an IFA professional negligence claim.

Call our Brighton and London offices today, on 020 7822 4106 or click through to find out more about our individual partners.

Further information

Claims for negligent pensions schemes
Live savings negligent advice claims