• March 29, 2024
 £233k awarded for taxing inheritance advice

£233k awarded for taxing inheritance advice

A 96-year old woman has been compensated following the delivery of incorrect inheritance tax advice, in a ruling by the High Court.

In a rare move, which involved a decision made by the Financial Ombudsman being overturned, the woman was awarded £233,000 worth of damages.

If an individual has a complaint and successfully goes through the internal system of a firm, the Ombudsman will then deal with the complaint, which can be in various areas of the financial services. Usually providing the final word on complaints, it is able to award up to £150,000.

In this instance however, the Ombudsman decision was overturned, with Manchester High Court ordering the insurance company, Zurich, to compensate over the incorrect advice which claimed to reduce inheritance tax.

The client, Angela Lenderink-Woods, was advised by financial adviser at Allied Dunbar, Huw Davies. This firm was later acquired in 2001 by Zurich.

Mrs Lenderink-Woods was then advised to transfer £567,700 into three Allied Dunbar investments by Mr Davies. These included a trust as well as an offshore bond.

Mr Davies was a “tied” adviser and could therefore only recommend schemes with Allied Dunbar. He was meant to suggest clients see an independent financial adviser if nothing under the firm was suitable.

After she suffered in a stroke in 2009, the family of Mrs Lenderink-Woods became concerned and questioned whether the advice given would reduce the bill for future inheritance tax.  They also complained in regards to the charges taken on the investments, stating that they were too high. The fact she lived overseas added another layer of complexity to the case.

Although Zurich agreed in 2012 to pay £459,000 in compensation, they later retracted the offer, stating that the investments had in fact been appropriate.

The complaint was heard by the Ombudsman in 2014, where it took Zurich’s side and said the final offer of £1,000 to the client was suitable.

The High Court has however ruled that Mr Davies had been negligent in the most recent decision. Mr Justice Norris stated that “every tax-based reason that Mr Davies gave for his advice was wrong”.

The “unnecessary charges” levied by Mr Davies had cancelled out all investment growth, and formed the basis of the £223,000 in damage award.

A spokesman for the Ombudsman stated: “It’s very rare for cases that we’ve previously looked at to go to court – and we’ll be looking at the court’s decision carefully.”

Insurance company Zurich stated that it had not offered financial advice for over a decade but that it had accepted the decision of the court.

 

 

Georgia Owen

Georgia is the Senior Content Executive and will be your primary contact when submitting your latest news. While studying for an LLB at the University of Liverpool, Georgia gained experience working within retail, as well as social media management. She later went on to work for a local newspaper, before starting at Today’s Wills and Probate.