Extent of common law duty of care owed in pensions misselling. Gorham & Others v British Telecommunications plc, Trustees of the BT Pension Scheme, & Standard Life Assurance Company
| Pages | 181-186 |
| DOI | https://doi.org/10.1108/eb025073 |
| Date | 01 February 2001 |
| Published date | 01 February 2001 |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 9 Number 2
Extent of common law duty of care owed in
pensions misselling
Gorham & Others v British
Telecommunications plc, Trustees of the BT
Pension Scheme, & Standard Life Assurance
Company
Court of Appeal, Civil Division: Pill LJ, Schiemann LJ, Rt Hon Sir Murray
Stuart-Smith
FACTS
The claimants who were the Appellants in
this case were a Mrs Gorham, widow of
Mr Gorham, and her two young children.
Mr Gorham had been employed by British
Telecommunications plc (BT) between
2nd April, 1991 until his death on 5th Sep-
tember, 1994. Upon joining BT, Mr
Gorham was informed by BT that he was
eligible to join the defined benefit occupa-
tional pension scheme. He was sent a
booklet about the scheme, which contained
an opting-out form at the back and stated
that if this form were not completed he
would automatically be joined into the
scheme. He did not complete the form but
pension contributions were, at his oral
instructions, never deducted from his salary
and that fact was apparent from his
monthly pay slip. The judge at first
instance found as a matter of fact that Mr
Gorham believed he was not a member of
the BT scheme until October 1992 from
which date onwards he believed that he
was a member of it. In autumn 1991 Mr
Gorham contacted Standard Life Assurance
Company (Standard Life) and was con-
tacted by a Mr Cornwell, a customer
representative of Standard Life. The Gor-
hams completed and signed a Standard Life
Personal Information Questionnaire which
prioritised Family Protection followed by
Retirement Planning and House Purchase.
Mr Cornwell's recommendations based on
the information supplied to him from the
Gorhams (who were described in the Stan-
dard Life correspondence as client and
spouse) included transfer of accrued pen-
sions rights with Mr Gorham's previous
employer to a personal pension contract
and payment into that contract by Mr
Gorham of monthly premiums of £80,
along with a small amount of life cover at
a cost of £5 per month. In November
1992 Mr Gorham, having read the BT
pension booklet and discovering that he
could not be a member of both the BT
scheme and have a personal pension, tele-
phoned the Standard Life helpline to be
told that the BT pension scheme was pre-
ferable to a personal pension scheme. At
that stage he stopped paying contributions
into the Standard Life pension scheme.
Despite his earlier belief that he had not
Journal of Financial Regulation
and Compliance, Vol. 9, No. 2,
2001, pp. 181-186
Henry Stewart Publications,
1358-1988
Page 181
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