More than 40,000 mis-sold pension policyholders are expected to receive compensation as well as their...
The High Court ruled against Needler Financial Services in the test case versus Ronald Taber regarding whether Taber should keep the entirety of a demutualisation windfall as well as compensation following a pension mis-selling by Needler.
Vice Chancellor, Sir Andrew Merritt's ruling underlined the 1997 PIA ruling that windfalls are "entirely collateral". The decision will likely cost the pension industry some £13.5bn rather than the £175m it would have cost had the verdict gone the other way.
Merrit ordered that Taber be paid compensation totalling £21,000 because he would have been better off staying with his occupational pension scheme rather than opening a Norwich Union scheme.
Taber was mis-sold a Norwich Union pension by Needler in 1990 which subsequently demutualised earning Taber an £8,000 windfall. Needler had argued that the windfall should cover some of the compensation costs owed for its mis-selling.
Jonathan Davies of Reynolds Porter Chamberlain, the solicitor representing Needler and Colliegiate said: "This case confirms that the law of causation is not straightforward and that the application of judicial common sense can produce surprising results. The plain facts are that every time a regulator or the judiciary has reviewed the mis-selling issue the costs of compensation have increased. This will inevitably have a knock-on effect on professional indemnity insurance and is unlikely to reduce the premiums IFAs will have to pay, as we had hoped if we had been successful."
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