His principal was subject to a FOS complaint about alleged mis-selling of a UCIS investment product; the main issue revolving around the suitability of the product against the complainant’s risk profile. The principal’s professional indemnity insurance cover had a UCIS exclusion. The complaint was upheld at adjudicator level and, then again, by an Ombudsman with the award nearing the FOS limit. Our client was consulted at all times throughout both the complaint and the FOS process by his principal.
Following the FOS process being exhausted (there being no realistic grounds for arguing that there should be a judicial review), our client was served with notice to pay the totality of the FOS award under the indemnity in his agreement.
We resisted the indemnity claim on the basis that (i) any shortcomings in the suitability process were attributable to systems and controls/compliance failures within the company and (ii) in any event, there was an implied term in our client’s appointed representative agreement that the principal would effect adequate PI cover which our client would have the benefit of. Accordingly, we did not believe that our client had any liability over and above the policy excess.
The matter became extremely contentious and, following threats of legal proceedings (met with threats of our client making a counterclaim) the matter was dropped by the principal without our client having to meet any liability.