No investment growth
At the time of the hearing in July 2016, the court found the client’s investments had not grown over the 15 years it was invested, due to the high charges in place and the underperformance of the discretionary fund manager Davies chose, Seven Investment Management (7IM).
“The total of the funds withdrawn and remaining is more or less the same as the total originally invested,” the judge said, although he added that the performance of the investment was outside the “scope” of the case.
Zurich FOS decision
The ruling has effectively overturned a 2014 Financial Ombudsman Service (FOS) decision that found in Zurich’s favour.
The FOS rejected the complaint against Zurich in January 2014 on the basis that the advice to use the trust did not in itself cause financial detriment.
However, Justice Norris argued that the decision to put Lendernik-Woods’ money in trust and bonds meant she did not have access to her capital and could not receive income from it due to the trust arrangement.
‘Morally dodgy ground’
In a bizarre twist, Zurich initially offered her compensation of £459,567, when Lenderink-Woods brought her original complaint about the charges in July 2012. The company then retracted the offer a month later.
Zurich claimed it retracted the offer because it believed the original response may have been based on incorrect information.
This was despite a warning from a media relations manager at Zurich telling the company it was on morally “dodgy ground” with the retraction, and a compliance officer stating he felt “increasingly uncomfortable” with that course of action.
Zurich accepts ruling
A Zurich spokesman said the company accepted the ruling and would comply, adding “‘The events which formed the subject of the claim took place nearly 16 years ago, and Zurich ceased operating a network of advisers over 10 years ago.”
