Legal warfare over compensation for up to one million people who were mis-sold personal pensions is hotting up this week, with a series of actions and a High Court challenge by the pensions industry to overturn guidance from the Securities and Investments Board (SIB).
The pensions industry's attempt to judicially review SIB guidance could delay what it regards as onerous and illegal pressure by the SIB to force independent financial advisers (IFAs) to review all their pension sales since 1988 and invite all clients to consider applying for compensation.
However, legal action by individuals will be unaffected and lawyers say that litigation is set to snowball.
“There is going to be a considerable number of writs being issued in the next few months,” says Philip Ryley, a partner in Devon firm Wolferstans and a member of the personal pensions steering committee of plaintiffs which comprises four firms.
The Law Society may also become involved in publicising the possibility of legal redress after talks with the committee.
The committee already has several hundred plaintiffs. Wolferstans has commenced eight actions against various IFAs, Pearl Assurance and Allied Dunbar Assurance. They allege negligence and breach of contract because financial advisers allegedly failed to apply an appropriate standard of care when selling to the public.
“The cases I have looked at are clearly so badly advised that we regard them as indefensible,” says Ryley.
Fishburn Boxer and other defendants' law firms have already made representations to the Legal Aid Board on the basis that legal action is unnecessary because the SIB guidance provides adequate redress. However IFA defendants simultaneously appear to undermine that view by attempting to judicially review the SIB guidance, says Ryley.
The High Court action by the IFA Association and others will seek leave to apply for judicial review on Wednesday to overturn guidance in the SIB review, issued last October.