96-Year-Old Woman Compensated for Wrong Inheritance Tax Advice

Finders InternationalA recent court decision resulted in a 96-year-old woman being awarded almost quarter of million in compensation for incorrect financial advice intended to reduce inheritance tax.

An article in The Telegraph reported that the High Court overturned a Financial Ombudsman decision relating to the advice given to Angela Lenderink-Woods 16 years ago. The Telegraph described the move as “extremely rare”.

The Financial Ombudsman deals with complaints against financial services. It can award up to £150,000 and normally its decisions are the final ones.

However, Manchester High Court overturned its decision and ordered the insurance company Zurich to pay compensation to Mrs Lenderink-Woods.

The pensioner had been advised by Huw Davies, a financial adviser at Allied Dunbar a firm later acquired by Zurich. She was advised to transfer more than £500,000 into three Allied Dunbar investments which included a trust and offshore bond.

Because Mr Davies was a “tied” adviser, he could only advise Mrs Lenderink-Woods invest in Allied Dunbar schemes. He was meant to suggest she consult an independent financial adviser if such schemes weren’t suitable.

After Mrs Lenderink-Woods suffered a stroke in 2009, her family became concerned and they asked if the advice would cut a future inheritance tax bill. The matter was made more difficult because she lived abroad. Her family also complained that the charges for the investments were too high.

In 2012, Zurich agreed to compensate Mrs Lenderink-Woods to the tune of £459,000. They withdrew the offer two months later, saying the investments had been suitable. The complaint was heard by the Financial Ombudsman in 2014, but the ombudsman took the side of Zurich and agreed with its final offer of £1,000 compensation.

The High Court, however, ruled that Mr Davies had been negligent. Mr Justice Norris said that every tax-based reason Mr Davies had given for his advice was wrong. He awarded damages of £223,000, the figure based on the “unnecessary charges” Mr Davies had levied that had cancelled out the growth of the investment.

Speaking about the decision, the Financial Ombudsman’s office said it was very rare for such cases to go to court and they would be studying the decision carefully.

Finders International Probate Genealogists

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