Court of Appeal rules on the scope of s.47 of the Financial Services Act 1986
| Published date | 01 April 1999 |
| Date | 01 April 1999 |
| DOI | https://doi.org/10.1108/eb025025 |
| Pages | 385-387 |
| Author | Evans LJ,Ward LJ,Mummery LJ,David Capps |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 7 Number 4
Court of Appeal rules on the scope of s.47 of
the Financial Services Act 1986
Norwich Union Life Insurance Co Ltd (formerly Norwich Union Life
Insurance Society) v Qureshi & others: Evans LJ, Ward LJ, Mummery LJ
Court of Appeal
Date of Judgment: 30th July 1999
Reported at: LTL 30th July 1999: Times Law Reports, 13th August 1999
David Capps
Dibb Lupton Alsop, 125 London
Wall,
London EC2Y 5AE; Tel: 0171 796 6944; Fax: 0171 796 6932.
INTRODUCTION
In a 1999 Court of Appeal decision1 it was
held that s.47 of the Financial Services Act
1986 (the Act) did not create a new, wider
duty of disclosure than that already existing
at common law or in equity.
Section 47(1 )(a) makes it an offence for
a person to make a statement, promise or
forecast which they know to be mislead-
ing, false or deceptive or dishonestly con-
ceals material facts for the purpose of
inducing, or being reckless as to whether it
may induce another person to enter or
offer to enter into (or refrain from offering
or entering into) an investment agreement
or to exercise (or refrain from exercising)
any rights conferred by an investment.
THE CASE
The facts of the case focused upon plans
marketed by Norwich Union to names,
underwriting members of Lloyds, under
which Norwich Union agreed to provide a
guarantee of the names' liability to Lloyds
up to an agreed limit. In return for the
guarantee, the names agreed to charge
property or investments to Norwich
Union by way of security and to take out,
and assign to Norwich Union, an endow-
ment policy by way of additional security.
Losses suffered by the names on the Lloyds
market were met mostly, or partly, by
payments from Norwich Union under
guarantees given on behalf of the names to
Lloyds under the plans. The names subse-
quently sought to be relieved from their
obligations to make repayments under the
terms of the plans on the grounds of
alleged breaches of duty. They contended
that Norwich Union had, in its marketing
documentation, failed to disclose informa-
tion in its (or its subsidiaries) possession
regarding impending losses at Lloyds in
breach of the common law duty to act in
utmost good faith. They further contended
that Norwich Union had dishonestly con-
cealed material facts (ie the impending
losses) in breach of a statutory duty which
they claimed was imposed under s.47 of
the Act.
THE DECISION
Lord Justice Mummery gave judgment as
follows.
1.
That the legal duty of utmost good
Journal of Financial Regulation
and Compliance, Vol. 7, No. 4,
1999.
pp. 385-387
© Henry Stewart Publications,
1358-1988
Page 385
To continue reading
Request your trial