In Worthing and another v Lloyds Bank plc [2015] EWHC 2836 (QB) the Court rejected the claim by Mr and Mrs Worthing for negligent advice from Lloyds TSB Private Banking Limited (Bank) in relation to investments in 2007 and when the investments were reviewed subsequently.

In 2007, the claimants invested £700,000 in an investment portfolio provided by the Bank.

The claimants surrendered their investment in the portfolio in 2008 after a review meeting and received £657,388.21.

The claimants maintained that the losses sustained were caused by negligent advice given to them by the Bank in the initial meeting and the review meeting. The claimants submitted that they should have been advised at the outset that the investment, as a medium-risk investment, was not suitable for them since they wanted a low risk investment and, as a result, they claimed their investment losses for negligence, breach of contract and for failure to comply with the Bank’s statutory duties under the FCA’s Conduct of Business Sourcebook (COBS rules).

The Court dismissed the claim on the facts of the case.

Importantly, the detailed file notes made by one of the Bank’s employees after the meetings with the claimants indicated that they surrendered the investments in 2008 because they needed the money to repay an overdraft, not because of the risk profile of the investments. Other points made in the decision include:

1. the balanced portfolio was a suitable investment for the claimants when they took it out in early 2007. They understood that it was a medium-risk investment, they knew what that meant and they knew what they were getting. There was accordingly no error for the defendant to correct in the period until the review that took place in March 2008;
2. even if the original advice had been wrong, the Bank was not under a continuing duty with regard to the original advice, so the claims relating to the initial advice were beyond the limitation period;
3. the Bank was under a duty to conduct the review in March 2008 with reasonable care and skill and in accordance with the COBS Rules, which it did; and
4. the contention that the Bank failed to advise the claimants that the portfolio was not suitable subsequently for them in 2008 failed because their attitude to risk had not changed, because it was reasonable to have given advice that no immediate decision should be taken to sell the portfolio, and because the future investment objectives of the claimants with regard to the portfolio could not, at the time, be properly assessed.

A copy of the judgment is available. http://bit.ly/1GFKhJz