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IFAs breathe sigh of relief as Court of Appeal delivers judgment in landmark FOS award case

20 February 2014

Investors who accept an award from the Financial Ombudsman Service (FOS) cannot pursue any other claims for further compensation through the courts for further compensation, the Court of Appeal has ruled today in the case of Clark v In Focus Asset Management & Tax Solutions.

Adam Edwards, a solicitor at law firm Browne Jacobson who specialises in handling IFA and financial services claims, said:

"The Court of Appeal decision is a huge sigh of relief and a welcome decision for many businesses that are subject to FOS jurisdiction. It provides increased certainty for FCA regulated entities and their insurers, where a FOS award has been accepted by a complainant. Had the appeal not been allowed, FOS complaints could have been used to seek to build a litigation fighting fund."

Barry and Julie Clark complained to the FOS in 2008 after they received financial investment advice from to invest the proceeds of the sale of a business into a geared traded endowment plan which eventually led to losses of £500,000. The Clarks secured a £100,000 award by the Financial Ombudsman Service. The FOS recommended that In Focus also pay the balance of the losses incurred by the Clarks. In Focus agreed to pay £100,000 but rejected the FOSs recommendation to pay any balance over this amount, arguing that the acceptance of an FOS award was final and binding and there was no legal justification to pursue another claim in the courts on a similar issue.

After accepting the £100,000 award, the maximum that could be awarded at the time, the Clarks issued civil proceedings to recover the balance of their losses. The Clarks were permitted to do so at first instance but the Court of Appeal has today overturned that decision.

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