The recent High Court case of Denning v Greenhalgh Financial Services Ltd (GFS) has highlighted important lessons about the scope of retainers and the issues surrounding an adviser’s duty of care in respect to advice given to a client by a previous firm.
In 2000, Mr Denning sought financial advice from Alexander Forbes Financial Services Ltd (AF), who advised him to transfer his occupational pension to another provider. In 2008, Mr Denning had grown dissatisfied with AF’s service and approached GFS for advice about the management of his investments. GFS’s retainer was restricted to advising on and arranging investments and contracts of insurance, and the firm made it clear it was not able to provide legal advice.
Mr Denning made complaints to the Ombudsman in 2009 and 2010 regarding AF’s advice, but the Ombudsman said he was too late to register a complaint for the transfer in 2000. He pursued a claim in 2013 which was also abandoned for the same reason.
A claim was then made against GFS by Mr Denning in 2013, which said that GFS had failed to review AF’s recommendation concerning the 2000 transfer and advise on a potential claim against AF. Mr Denning also alleged that because of GFS’s negligence, he missed an opportunity to pursue a claim again AF in 2008, when he could have received substantial damages.
In response, GFS said it did not have a duty to advise on the 2000 transfer or a potential claim against AF. Mr Denning’s claim was struck out, with the judge observing that he had not sought advice about the merits of AF’s advice in any correspondence with GFS.
The judge concluded that a court will only extend a professional adviser’s duty and liability beyond the scope of their retainer in limited circumstances. Although Mr Denning had voiced his dissatisfaction about AF, he had failed to ask GFS the right questions.
Paula Steele, managing partner at John Lamb Financial Planning, says: “This is a significant decision on the responsibilities of financial advisers and is a useful reminder of how important it is for the terms of a retainer to be made as clear as possible.”