A financial adviser faces bankruptcy after being found liable for miss-selling two life settlement policies following his principal firm’s failure to secure run-off professional indemnity insurance (PII) cover.

Mark Wayman was sole proprietor of Endowment Surrender Plus (ESP).  In 2003 he advised clients on the purchase of life settlement policies in his capacity as an appointed representative of Becque Wayman Investments Limited (BWIL).

In April 2009 BWIL ceased to be directly FSA authorised and failed to secure run-off PII cover.  Mr Wayman’s client’s lodged the miss-selling complaint in November 2009 after BWIL’s PII cover had ceased.

In October 2012 the case was heard in the Manchester Civil Justice Centre.  Wayman argued the advice contract was between BWIL as the principal firm and the clients, however the claimants heldthat Wayman did not make it clear that BWIL was the principal firm. The judge, Mr Justice Hodge, found that contracting parties were ESP and the clients. Wayman was ordered to pay £426,000 in compensation, interest and court costs.  In January 2013 he was granted leave to appeal.

“This case demonstrates the importance of securing run-off PII cover,” said James Burgoyne, Director, Brunel Professional Risks.  “Mr Wayman had PII in place in 2003, as an appointed representative of BWIL, when he gave the original advice, but a policy has to be in force when a claim is made.  By 2009, neither BWIL nor Mr Wayman had run-off cover, leaving him uninsured.  Professionals must remember that they can remain liable for the advice they give, and are especially exposed where a principal firm becomes insolvent. A frustrated claimant will explore every avenue for payment of their claim.”