Assignment of individual investors' claims to the Investors Compensation Scheme declared invalid (1) Investors Compensation Scheme Ltd v West Bromwich Building Society; (2) Same v Hopkin & Sons; (3) Alford & Ors v West Bromwich Building Society; (4) Armitage v West Bromwich Building Society

Pages78-80
Publication Date01 Jan 1997
DOIhttps://doi.org/10.1108/eb024910
AuthorJoanna Gray
SubjectAccounting & finance
Journal of Financial Regulation and Compliance Volume 5 Number 1
Assignment of individual investors' claims to the
Investors Compensation Scheme declared invalid
(1) Investors Compensation Scheme Ltd v West
Bromwich Building Society; (2) Same v Hopkin &
Sons;
(3) Alford & Ors v West Bromwich Building
Society; (4) Armitage v West Bromwich Building
Society
Chancery Division High Court: Evans-Lombe J
Date of Judgment: 3rd October, 1996
Reported at: Times Law Reports, 10th October, 1996
THE FACTS
This case concerned the validity of assignments
to the Investors Compensation Scheme (ICS)
of the claims of various individual investors
which arose out of the widespread mis-selling
of home income plans between 1989 and 1991.
The factual background to the case is given in
a statement of facts agreed between all parties
and appended to the judgment. A FIMBRA
regulated firm of independent financial advi-
sers,
Fisher Prew Smith Ltd advised the claim-
ants (including Messrs Alford and Armitage in
this action), to take out home income plans
involving equity release mortgages with the
West Bromwich Building Society (WBBS)
which were arranged by Hopkin & Sons (the
Solicitor Defendants). The firm of independent
financial advisers concerned failed and, as they
were authorised persons (FIMBRA members),
claims against them for negligence, breach of
contract, fiduciary and statutory duty were to
an extent covered by the s.54A Financial Ser-
vices Act (FSA) statutory compensation
scheme. The claimants were duly compensated
by the ICS within a range of 50—75 per cent
of their claims at law but despite this many of
the individuals affected (including the Plaintiffs
in the third and fourth actions) still have out-
standing liabilities to the WBBS. When the
individual claimants received offers of compen-
sation from the ICS they signed a standard
claim form which contained a declaration that
the claimants had received no compensation of
any kind in relation to the claim and con-
firmed that they did not expect to receive any
such in the future, a declaration that ICS
would take over the claimants' rights and
claims against third parties on the payment of
any compensation. The claim form further
provided 'ICS agrees that the following claim
shall not be treated as a third party claim for
the purpose of this agreement and the benefits
of such claim shall inure to you absolutely:
Any claim (whether sounding in recission for
undue influence or otherwise) that you have or
may have against [the WBBS] in which you
claim an abatement of sums which you would
otherwise have to repay to that society in con-
nection with the transaction and dealings
giving rise to the claim (including interest on
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