Assignment of individual investors' claims to the Investors Compensation Scheme declared invalid (1) Investors Compensation Scheme Ltd v West Bromwich Building Society; (2) Same v Hopkin & Sons; (3) Alford & Ors v West Bromwich Building Society; (4) Armitage v West Bromwich Building Society

Abstract

This case concerned the validity of assignments to the Investors Compensation Scheme (ICS) of the claims of various individual investors which arose out of the widespread mis‐selling of home income plans between 1989 and 1991. The factual background to the case is given in a statement of facts agreed between all parties and appended to the judgment. A FIMBRA regulated firm of independent financial advisers, Fisher Prew Smith Ltd advised the claimants (including Messrs Alford and Armitage in this action), to take out home income plans involving equity release mortgages with the West Bromwich Building Society (WBBS) which were arranged by Hopkin & Sons (the Solicitor Defendants). The firm of independent financial advisers concerned failed and, as they were authorised persons (FIMBRA members), claims against them for negligence, breach of contract, fiduciary and statutory duty were to an extent covered by the s.54A Financial Services Act (FSA) statutory compensation scheme. The claimants were duly compensated by the ICS within a range of 50—75 per cent of their claims at law but despite this many of the individuals affected (including the Plaintiffs in the third and fourth actions) still have outstanding liabilities to the WBBS. When the individual claimants received offers of compensation from the ICS they signed a standard claim form which contained a declaration that the claimants had received no compensation of any kind in relation to the claim and confirmed that they did not expect to receive any such in the future, a declaration that ICS would take over the claimants' rights and claims against third parties on the payment of any compensation. The claim form further provided ‘ICS agrees that the following claim shall not be treated as a third party claim for the purpose of this agreement and the benefits of such claim shall inure to you absolutely: Any claim (whether sounding in recission for undue influence or otherwise) that you have or may have against [the WBBS] in which you claim an abatement of sums which you would otherwise have to repay to that society in connection with the transaction and dealings giving rise to the claim (including interest on any such sums’. The claim form further provided that the claimants agreed, in the event of their receiving any money or assets in respect of the claim from the scheme participant firm or from any FSA trustee, to transfer such money or assets to the ICS. It provided for an assignment to ICS of claimants' third party claims in the following words ‘We hereby assign to ICS each and every third party claim and the benefit thereof’.

Citation

Gray, J. (1997), "Assignment of individual investors' claims to the Investors Compensation Scheme declared invalid (1) Investors Compensation Scheme Ltd v West Bromwich Building Society; (2) Same v Hopkin & Sons; (3) Alford & Ors v West Bromwich Building Society; (4) Armitage v West Bromwich Building Society", Journal of Financial Regulation and Compliance, Vol. 5 No. 1, pp. 78-80. https://doi.org/10.1108/eb024910