The following case studies are indicative of just a few of the cases that Marc Egerton has been involved in recently.
Case Study A
Claimant A, an IFA, was severely injured in a road accident, as a result of which his business earnings suffered and he alleged that he was unable to complete a proposed takeover of a much larger IFA business. The claim was for about £100,000 in lost earnings from the existing business, and around £10m for lost opportunity in relation to the failed takeover.
Marc Egerton was appointed as the expert for the Defendant, the insurer of the third party motor vehicle involved in the accident. His instructions were to consider liability and quantum in relation to the £10m claim for lost opportunity.
In his opinion, the extrapolation of the future value of the merged businesses was grossly exagerated, and there were severe doubts that the Financial Services Authority would ever have approved the transaction. The Claimant had no previous experience of running a large multi-branch operation, had insufficient existing compliance controls and inadequate plans to increase them, and did not have the necessary management skills or systems in place. His financial projections on both costs and income were felt to be highly optimistic.
Following the issue of the report, the claim was settled at mediation for little more than the £100,000 claim for lost earnings (which was never in dispute) with the lost opportunity claim being almost completely dismissed.
Case Study B
Claimant B was an investor who had been advised by his IFA to undertake a pension transfer from his occupational scheme, and had lost about £300,000 in the following five years.
Marc Egerton was appointed as expert for the Claimant.
His report demonstrated that the advice to transfer was flawed as the benefits from the occupational scheme were always likely to have been greater than those of the insured scheme. No transfer value analysis had been carried out and there were a considerable number of serious compliance breaches which demonstrated that the advising IFA had fallen below the standards of a a reasonably competent adviser. His report also pointed out that the IFA was an appointed representative of a network (which had been overlooked by the instructing solicitors) and the network was therefore joined in the action. The professional indemnity insurers of the network settled the claim at mediation at close to full value.
Case Study C
Claimant C appointed the wealth management division of a major bank to manage his portfolio on a discretionary basis. He became ill and failed to respond to repeated requests from the bank for updated information about his personal circumstances. In the absence of any new instructions the bank continued to manage the portfolio in accordance with the original objectives and risk profile, although it was alleged by the Claimant that these were no longer appropriate. The claim was for portfolio losses of some £40,000.
Marc Egerton was appointed by the bank as its expert. His opinion was that the bank had not broken any rules and had done all that it was expected to do, but even if the Claimant had informed it about his changed circumstances it seemed doubtful that the original objectives had become inappropriate.
This case went to trial and the judge held that the bank should have done more to obtain updated information, but even if it had succeeded the claim still failed on causation because he did not believe that the Claimant would have acted differently and the lossses would still have been incurred.
Case Study D
Claimant D was a fee-only IFA bringing a claim against a client for non-payment of a £12,000 fee relating to inheritance tax advice which was not taken up. The Defendant argued that the advice was unsuitable and that he had never agreed to pay the fee.
Marc Egerton was appointed as the joint expert for both parties. His report showed that there was evidence that the IFA had secured agreement for the payment of a fee, but that the fee agreement was poorly constructed and ambiguous. It was very unclear and it did not have the effect that the IFA intended. His opinion was also that the fee structure was inappropriate for the type of service being offered, and that the fee being charged was excessive and therefore in breach of Financial Services Authority rules. Nevertheless, in his opinion the IFA had made it very clear that it was a fee-only practice and would charge a fee regardless of whether or not its advice was followed.
Both parties felt that the report was valuable in helping them to agree a settlement. The Defendant did pay a fee, but for a considerably smaller sum than being claimed originally.
