A large Manchester law firm is seeking to bring professional negligence claims against IFAs who invested clients in the Arch cru fund range, following Treasury Secretary Mark Hoban's refusal yesterday to launch a government inquiry into Capita's role.
Pannone, which has worked on negligence claims related to Keydata and the Icelandic banking crisis, said the six IFA businesses on its radar include networks and nationals as well as smaller firms, and it expects this number to grow to the hundreds.
Julia Norris, senior associate at Pannone, said the firm had already been approached by investors concerned about the advice they had received, but had told them to wait to see the outcome of yesterday's debate.
Hoban's dismissal of further action or inquiry into Capita's role as authorised corporate director of the fund range left investors who face losses of 30% or more with "little choice" but to seek redress from their IFAs.
"If Capita had paid more in compensation it may not have been necessary. That doesn't affect the claims of negligence, it just affects whether they are worth pursuing. Now investors don't have a choice," she said.
In his response to the debate yesterday, Hoban repeatedly raised the issue of IFAs and investors who may have been mis-advised to invest in the Arch cru range
He repeatedly said they were "free to challenge their IFA to see if their advice was appropriate"
Norris said her clients are mostly retired people in their sixties and seventies who consider themselves cautious investors. Many had invested in Arch cru half through their SIPP and half through a secondary private investment, she said.
"They trusted their advisers and relied on their expertise," she said.
Pannone will look to advisers' professional indemnity (PI) insurers to foot the bill for any claims. Where firms have no PI cover the lawyers will seek to sue the owners of the advice business.
Some large IFA PI insurers have put exclusions for Arch cru advice in their renewal polices, IFAonline understands.
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