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Mattioli Woods battles PI provider over £400k claims

by Brian Cantwell on Jan 29, 2013 at 13:41

Mattioli Woods battles PI provider over £400k claims

Sipp provider and advisory firm Mattioli Woods is battling a professional indemnity (PI) insurer over two claims for client redress totalling £400,000.

The claims relate to investment advice and are subject to separate legal wrangles between lawyers representing Mattioli Woods and the claimants.

Although Mattioli Woods has not conceded that the claims are valid, it is at loggerheads with a PI insurer which has refused to pay out if they are deemed to be legitimate, on the grounds that they were made outside the period for which the insurer covered the advice firm.

In its interim results for the six months ended 30 November 2012 Mattioli Woods said: ‘A number of claims were notified to the group's PI insurers in respect of the period from 18 February 2010 to 17 August 2011. The insurers have declined to indemnify the group in respect of certain of these claims. The group is of the opinion that the insurers' position is without any merit and is challenging their view.’

Nathan Imlach, Mattioli Woods finance director, said the firm would be in line to pay out £400,000 if the claimants and PI insurer won their battles.

'In a worst case scenario, if the claimants’ position is upheld and the insurer's position is upheld, then we're on the hook for £400,000,’ he said.

Imlach (pictured) said it was not always clear when a dissatisfied customer become a complainant.

'On any PI insurance policy there's a notification process….and in each period of insurance you have to notify claims and potential claims. Claims and potential claims are not a black and white thing,' he said.

'When you've got an unhappy client - and through the investment markets of 2009/2010 there were very few investment advisory businesses that didn't have unhappy clients- the question from the PI insurance perspective is when does an unhappy client become a potential claim?'

A statement in Mattioli Woods' interim results said it had not set aside the £400,000 to pay the claims.

It said: ‘The estimated compensation payable should the clients' claims be successful, with no indemnity provided by the insurers, is £400,000. To the extent the group believes it is possible but not probable that a claim will succeed and result in an economic outflow, no provision is made in these financial statements.’

7 comments so far. Why not have your say?

l'ifa passeport en provenance de France

Jan 29, 2013 at 14:22

Imlach (pictured) said it was not always clear when a dissatisfied customer become a complainant ? oh dear hope the FSA are not reading this even the office cleaner needs to know the procedure

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Jonathan Newell - ifaprosure.com

Jan 29, 2013 at 14:42

It is of course a lot easier to readily identify a client complaint / expression of dissatisfaction than it is to identify a 'circumstance' which could give rise to a complaint. PI policies generally require the policyholder to notify both claims and 'circumstances' in timely fashion. Without limitation; a 'circumstance' can be construed as a request from a client to retrospectively justify certain advice / recommendations without necessarily raising a dissatisfaction - arguably this can be foreseen as a pre-cursor to future complaint. Similarly, a 'circumstance' can also be determined by an internal awareness of a deficiency in the professional services rendered but without the affected client(s) being conscious of the said deficiency. If you are uncertain whether a matter constitutes as a claim or circumstance, avoid any risk and notify the matter immediately to your broker/insurer(s) and let insurer(s) decide whether a situation is deemed notifiable or not. This will help mitigate against any potential coverage disputes. Finally, you should always carefully read the T&Cs of your policy and take the advice from the broker who placed your policy.

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Alasdair Sampson (FinServ Solicitor)

Jan 29, 2013 at 14:52

I suspect that what Mr Imlach meant was in relation to the notification procedure within the PI policy.

A complaint for the purposes of the DISP Rules is made when there is any expression of dissatisfaction whether that be verbal or in writing, either letter or email.

The facts and nature of that expression of dissatisfaction may be insufficient to meet the definition of a claim or intimation of claim in terms of the PI policy such that an intimation has to be made – and the PI insurer may reject that as a valid notification. That is particularly a problem when you are getting to the end of your PI policy and you are trying to protect your back by making a notification of circumstances that may give rise to a claim.

When the complaint is formalised and the complainant says he is looking for redress then that certainly would meet the definition in most PI policies of a claim that had to be notified – the problem being that the insurer may later say that you should have made the intimation earlier and that your are out of time.

The PI insurers do have it both ways.

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Chartered Mark

Jan 29, 2013 at 15:00

Although there may be technical issues about the PI cover etc. the thing that springs to my mind is an article in NMA a few months ago, when this very firm was professing itself to be the way to run an IFA in the New Model post RDR days.

Lets just hope they do not do a phenix on the rest of us.

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Tim Page

Jan 29, 2013 at 16:09

My money is on the PI insurer winning...

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Nick Leeson

Jan 30, 2013 at 09:33

I quite agree Tim. PI Insurance is a complete waste of time & money, & should be scrapped.

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Mr X

Jan 30, 2013 at 17:16

Do we have details as to the nature of the complaint? Was it a property syndicated investment for a client approaching retirement?

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