Woman who took "drastically incorrect financial advice" wins high court battleBy Julie Spencer
October 24, 2012
A woman who took ‘drastically incorrect financial advice’ and remortgaged her Sandhurst home to invest in the doomed Spanish property market has won a High Court test case.
Charmaine Emptage could now be in line for a much higher payout after a High Court judge ruled the compensation she was offered for the negligent advice was not fair.
Ms Emptage was persuaded to swap her £40,000 mortgage on her home in Owlsmoor for an interest-only mortgage of £111,000 and then to invest £70,000 into a Spanish property, London’s High Court heard.
Ms Emptage and her partner were acting on the advice of insurance and property broker Peter Sharratt, but ended up with a Spanish property that was virtually worthless.
Mr Justice Haddon-Cave said Mr Sharratt’s advice turned out to be ‘drastically incorrect’ and there was no argument that it was negligent.
When the Spanish property bubble burst in 2009, Ms Emptage, a manufacturing worker, and her lorry driver partner were left with a huge mortgage which Mr Sharratt had previously told them they would have been on course to pay off by 2015.
The couple were faced with the prospect of losing their home but were awarded £11,522 in January 2010 by the Financial Services Compensation Scheme Ltd (FSCS).
The award sparked a High Court test case in which Ms Emptage’s legal team attacked the payout as derisory and irrational.
And, in a ruling expected to have a major effect on other cases, Mr Justice Haddon-Cave upheld her judicial review challenge, saying that the award to Ms Emptage ‘in no way represented fair compensation’.
He said the FSCS had failed to abide by the principle that victims of negligent financial advice are entitled to be compensated for the ‘mischief’ cause.
And, as far as possible, they should be put back in the same position they would have been in, had the breach of rules not occurred.
In a written ruling after an earlier hearing in June, the judge concluded: “In essence, the FSCS failed to compensate Ms Emptage for the relevant breach in question, namely Mr Sharratt’s negligent mortgage advice which left her with a large mortgage which she had no means of repaying ... FSCS misdirected itself and acted irrationally.”
The FSCS was ordered to pay Ms Emptage’s legal costs, which came to £150,000, but was granted permission to appeal against the judge’s ruling after he recognised the case raised important issues of principle with potentially wide implications.