Out-of-work IFAs to launch case against Park Row next week

A band of 28 ex-Park Row advisers will next week begin legal proceedings against their former employer, claiming thousands of pounds in compensation for loss of earnings.

In a six-page Letter of Claim, the advisers will accuse Park Row of being in "breach of contract" and "breach of duty".

The lawyer spearheading the challenge says Park Row must respond to the letter and faces legal proceedings if it disputes the allegations and refuses to enter into an out-of-court consensus agreement with the group.

None of the 28 individuals have been able to service customers since 13 November 2009 when the IFA arm of Royal Liver fell into insolvency, and the FSA revoked the advisers' permissions to practice.

David Turner, a financial disputes lawyer at Foot Anstey, says his clients allege the loss of their permissions is a direct result of Park Row's failure to maintain proper compliance checks and processes.

"It was the FSA which cancelled their permissions, but only because of poor compliance processes at Park Row," he says.

"The advisers had their permissions closed because they happened to be with the firm at the time it was under investigation."

He says he will argue Park Row had a duty of care to provide the adequate compliance services the advisers believed they were paying for, but it failed to do so.

"If Park Row couldn't get its compliance procedures correct then it is in breach of contract and breach of duty to the advisers," he says.

Led by ex-Park Row adviser Matthew Berry, the group also alleges the firm knew about an FSA investigation into its operations and that this could lead to the loss of advisers' authorisation, but encouraged advisers to leave as part of "cleaning house" during the wind-down.

Park Row used incentives such as dropping a requirement for a three-month notice period to "dupe" them into resigning, according to the advisers.

In February, the FSA reported evidence a quarter of cases written by Park Row advisers continued to be "unsuitable" despite two years of warnings. It fined former chief executive Peter Sprung and ordered Park Row to pay customer redress of between £5m and £7.8m.

Turner says it is Park Row's responsibility if "two or three really rotten apples" who were "not fit and proper" to give advice were allowed to bring down the whole firm.

"If that is the case, it is still Park Row's fault for not picking it up on compliance."

He adds none of the advisers he is representing have been categorised by the FSA as "not fit and proper" or as part of problems at the firm.

The advisers are awaiting re-authorisation by the FSA before they can join another firm.