In a case which re-defined the scope of the financial services compensation scheme, a woman who re-mortgaged her home and invested almost everything she had in the doomed Spanish property market on the basis of ‘drastically incorrect’ financial advice has triumphed in her fight to recover her losses.
The woman had wanted to reduce her mortgage and pay it off early but ended up in a quagmire of endless debt due to admittedly negligent advice from an independent insurance and mortgage broker. On his advice, she had swapped the £40,000 repayment mortgage on her home for an interest only mortgage of more than £111,000 and ploughed over £70,000 into purchasing a flat in Spain.
When the Spanish property bubble burst in 2009, the woman was left with a mortgage which she had no prospect of paying off and the Spanish property which was virtually worthless. With her home at risk, the woman applied to the Financial Services Compensation Scheme Ltd (FSCS) which awarded her £11,522.98, a sum which her lawyers attacked as derisory.
She sought judicial review of the decision and the High Court subsequently saved her from ruin when it ruled that the award in no way represented fair compensation for her devastating losses. The FSCS was directed to put her back, as far as could be achieved, in the same financial position that she would have been in had the negligent advice not been given.
Shaun Underhill, a Partner at Winchester law firm Shentons, commented ‘if you have relied on the advice of a professional person and that advice turns out to have been incorrect, it is worth investigating whether you might have a legal case against that person for compensation. We would be pleased to advise anyone who finds themselves in a similar situation.’