Firms moot Court of Appeal plea after pensions judgment
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Attempts by life companies to stop litigation over the misselling of pensions scandal took a knock last week after plaintiffs won an important first round in court allowing them to sue while waiting for companies' compensation reviews.
The ruling affects around a million people thought to be due compensation totalling some £2 billion. Dozens of law firms are advising companies and investors on the matter.
Judge Raymond Jack QC in Bristol's Mercantile Court, now running a pensions litigation list, rejected applications by five companies to stay proceedings by plaintiffs pending the completion of the industry-wide review, proposed by financial regulator the Securities and Investments Board (SIB).
The ruling lets plaintiffs continue their claims through court proceedings in tandem with the review. The judge also refused the companies leave to appeal and they will now study the judgment before deciding whether to appeal directly to the Court of Appeal.
While the ruling involved six plaintiffs, it will "set a very strong precedent" for others wishing to take legal actions, said solicitor Philip Ryley, head of pensions at Bristol firm Ringrose Wharton. The firm acts for five of the six plaintiffs and co-ordinates a five-firm action group handling claims.
"The judgment is a victory for those individual investors concerned but beyond that it is a victory for all investors who do not wish to be bound by the life industry's review time-table," said Ryley.
"In broader terms, it is a victory for choice. Until this point the industry's regulators defined how and when individual claims are to be reviewed. This decision means individuals are not bound by that timetable."
The life companies involved and their solicitors in the actions are: Prudential (Lovell White Durrant); Gan Life (Nicholson Graham & Jones); TSB and Hill Samuel (both Pinsent Curtis); and Irish Life (Radcliffes Crossman Block).
Other top City firms are known to be advising companies due to become the focus of litigation involving another 70 writs. The judge aims to give directions on the conduct of litigation on 22 February.
Ryley said many life companies maintain an independent investigation by plaintiffs is "unnecessary" and most companies "are refusing to settle the costs" of such investigations. The ruling identifies situations where an investor should seek an investigation, he said.
"In our view life companies are inviting court actions if they continue to refuse to settle reasonable costs...the industry review primarily relies upon the life companies investigating themselves and without independent advice investors are left to rely on the very organisations who may have badly advised them," he said.
The Prudential, TSB, and Hill Samuel said they were disappointed with the outcome. A Prudential spokeswoman said: "We note that the judge felt his decision should not be regarded as discrediting the SIB review process generally, and seems to have been based largely on the fact that he was not convinced that allowing the cases to proceed would encourage a flood of similar litigation."
She added: "Our concern remains that if large numbers of investors issue proceedings then the pension providers' resources, which should be directed to carrying out the review, would have to be re-directed to funding litigation."
The TSB said: "If a stay had been granted we would have been able to proceed with what we see as the best and fairest way forward. The review of our pension transfer business will now be more difficult."