Investors' claims in relation to negligent financial advice time‐barred Michael Martin & Another v Britannia Life Limited
| Date | 01 February 2001 |
| DOI | https://doi.org/10.1108/eb025074 |
| Published date | 01 February 2001 |
| Pages | 187-191 |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 9 Number 2
Investors' claims in relation to negligent
financial advice time-barred
Michael Martin & Another v Britannia Life
Limited
High Court, Chancery Division: Parker J
FACTS
Mr and Mrs Martin, the claimants, received
financial advice from Mr Sherman, a repre-
sentative of the Life Association of Scotland
in 1991. The long-term insurance business
of the Life Association for Scotland was
transferred to Britannia Life Ltd. in 1994,
hence their position as Defendant to this
claim. The financial advice the Martins
received involved, in
brief,
a remortgage of
their house, the surrender of a number of
existing life policies which were collateral
security for an existing mortgage on the
house, the taking out of a new endowment
policy and a pension policy with the new
endowment policy being charged as collat-
eral security on the mortgage. The judge
described Mr Sherman as being, at the
material time, a self-employed financial
consultant but he was actually for the pur-
poses of the Financial Services Act 1986 a
company representative of the Life Associa-
tion for Scotland (LAS) authorised only to
advise, market and sell that group's pro-
ducts.
Mr Sherman was therefore a com-
pany representative of LAS within the
meaning of rule 1.2 of the then applicable
rules of the Life Assurance Unit Trust and
Regulatory Organisation (LAUTRO).
ACTION
Mr and Mrs Martin claimed that Mr Sher-
man failed to advise them of the true level
of ongoing financial commitments under-
taken by them as a result of these financial
transactions, that he failed to advise them
of the disadvantages of surrendering the
existing life policies and that he failed to
take full and appropriate account of their
financial circumstances so that they were
left with an essentially unaffordable pack-
age of financial transactions. They argued
that this amounted to negligent financial
advice on the part of Mr Sherman.
Accordingly they claimed damages against
Britannia Life Ltd (Britannia) in respect of
the alleged negligence and also pursuant to
s.62 Financial Services Act 1986.
DECISION
Mr Justice Jonathan Parker, after a careful
review of the evidence, including that of
expert witnesses for either side as to the
financial advice given, concluded that the
Martins' claims in negligence and under
s.62 Financial Services Act 1996 were made
out to his satisfaction but that Britannia's
defence of statutory limitation succeeded so
that, since more than six years had elapsed
Journal of Financial Regulation
and Compliance, Vol. 9, No. 2,
2001,
pp. 187-191
Henry Stewart Publications.
1358-1988
Page 187
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