A Carlisle law firm and a local independent financial adviser played key parts in a marathon legal battle which has ended with the High Court awarding a 96-year-old woman £223,000 in compensation.

Joe Willows, the adviser involved, has told how insurance giant Zurich repeatedly threatened him with legal costs of around £200,000 after he helped the pensioner fight the four-year case – a tactic condemned as “chilling” by the judge.

Mr Willows, director of Dalston based Integer Financial Management Limited, was so appalled by the financial advice given 16 years ago to Angela Lenderink-Woods that he challenged it – initially with Zurich and then with the Financial Ombudsman Service.

The pensioner was originally advised by Huw Davies, a financial adviser and family friend, to sink her £567,700 savings into a complex gift and loan trust scheme. The aim was to shelter her cash from Inheritance Tax – a strategy to help people who live mainly in the UK.

But in the case of Mrs Lenderink-Woods, the advice was entirely wrong because she lived in Costa Rica. This meant she did not need the complex and expensive scheme to avoid Inheritance Tax. As an adviser “tied” to Allied Dunbar (acquired by Zurich in 2001), Mr Davies could only recommend that firm’s schemes, but if nothing was suitable he should have told her to see an independent financial adviser.

His bad advice meant her savings were eroded by the high fees.

When the Ombudsman threw out Mrs Lenderink-Woods’ claim, Mr Willows introduced her to Carlisle law firm Bendles, where partner Michael Johnson took on the case. It concluded with a four-day trial in Manchester High Court.

Hearing from witnesses from across the globe, the court was told how Mr Davies told the pensioner to transfer her cash into three Allied Dunbar investments, including a trust and offshore bond.

After her money dwindled, she tracked down Mr Willows for advice. He immediately spotted that the advice she’d been given was wrong. It also emerged that the fees she was charged had wiped out any investment gains, leaving her unable to live on them. The Financial Ombudsman heard the complaint in 2014 but sided with Zurich.

Mr Johnson described the case as a “David and Goliath” battle. He praised Mrs Lenderink-Woods’ courage and tenacity in the face of determined opposition from the multi-national insurance giant.

He said Zurich threw everything into defending the case, including:

  • Comprehensively denying that it, or its adviser, had done anything wrong (despite previous admissions that they had)
  • Repeatedly threatening Mr Willows with a huge third-party costs order
  • Trying to have the case struck out on the basis that Mrs Lenderink-Woods should have known sooner that the advice was wrong
  • Repeatedly delaying full disclosure of its relevant documents

Mr Johnson said the case was legally significant because it confirmed that a tied agent working as a financial adviser is obliged to give competent advice – even if that means advising a client to buy a product not offered by his or her company.

He said the case was also notable because it followed a “wrong” decision of the Financial Services Ombudsman to refuse to award her any compensation. The Ombudsman had failed to properly assess her financial losses, he said.

Mr Justice Norris was critical of Mr Davies, saying he had failed to tell the pensioner accurately about the charges she faced, and he was scathing about Zurich.

Commenting on how the firm repeatedly threatened Mr Willows with legal costs should the pensioner lose her case, the judge said: “It is regrettable that Zurich... said they reserved their right to seek a third-party costs order against Mr Willows.

“Such behaviour has a chilling effect on those who advise clients who are pursuing claims against large providers of financial services.”

He awarded £223,000 of damages based on “unnecessary charges” levied by Mr Davies, which had cancelled out all investment growth.

Mr Willows said Zurich’s handling of the case was “utterly reprehensible”.

“Their intention was clearly to scare me off when I was simply trying to do the decent thing to help a vulnerable client,” he said. “This case raises a huge question mark over the way Zurich treats genuine customer complaints.”

Mr Willows said Zurich even ignored their own internal advice about “what was morally right”. He also had “grave concerns” over the Financial Ombudsman Service’s handling of this complaint.

“The Financial Ombudsman Service (FOS) adjudicator initially intended to uphold the complaint but Zurich persuaded him to change his mind. It is worrying how easily Zurich was able to lead him to the ‘wrong’ decision. It beggars belief that he could conclude my client had suffered no detriment and should receive nothing more than £1,000 for the inconvenience.”

A spokesman for the Ombudsman said: “It’s very rare for cases that we’ve previously looked at to go to court – and we’ll be looking at the court’s decision carefully.”

A Zurich spokesman: “Zurich notes the judgment delivered by the Manchester High Court. 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. Zurich accepts the ruling and will comply with it.”