19th July 2018
Making A Professional Negligence Claim? Don’t Forget This
Have the poor advice or negligent actions of your professional adviser – such as your IFA, surveyor, accountant or architect – caused you financial loss? If so, you may be considering bringing a professional negligence claim against them to get your money back. I discussed these claims generally in the previous post. Here are a few other important points to take into account.
First, the time limit for issuing court proceedings is generally 6 years from the date of the negligent advice (or the loss it caused). This deadline can come up fast. For example, let’s say your financial adviser informed you 5½ years ago of a tax planning scheme and advised you to participate in it. The HMRC has recently levied a fine on you because of your participation in the scheme. If your financial adviser was in breach of contract by giving you the advice, you may have only 6 months to issue proceedings.
After 6 years a claim is effectively dead. But what happens if you only suffer the loss after that period? You only knew that you had a claim after the end of the 6 year period. Is all hope lost?
No, there is a way of extending the time limit. Where you only find out about the facts about the claim later, you are allowed 3 years from that point to issue proceedings. But only up to 15 years after the adviser’s actions or advice.
Second, you have to ‘mitigate’ your loss. This means you have to take reasonable steps to minimise the loss. You can’t simply allow a loss to occur if it could be prevented. You also have to avoid increasing the loss.
Third, the adviser might defend their position by saying that you yourself caused some – or even all – of the loss. This is called an allegation of contributory negligence. A typical argument by an adviser would be that you knew or should have known about the risk of the loss, and went ahead anyway.
If a claim of contributory negligence is successful, then the compensation you receive would be reduced. For example, if your loss was £1 million, and your contributory negligence was found to be 50%, then your compensation would be only £500,000.
For more information about bringing a professional negligence claim, click here.