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Zaki and Others v Credit Suisse (UK) Limited

Posted on 04/10/2011 · Posted in Expert Witness, Financial Litigation, Structured Products

Advice, suitability 

The Claimants were Mr Zeid and his wife and daughters. The Defendant was Credit Suisse (UK) Limited with whom the Claimant held a number of structured financial products.

In October 2008 the Claimants failed to meet a margin call made by the Defendant and the Defendant took the step of liquidating some of the Claimants’ products. The result was a loss to the Claimants of approximately $69.4million. The Claimants believed that the Defendant was responsible for their loss. They alleged that the Defendant had not complied with FSA rules, in particular the suitability of advice requirements of COB 5 and COBS 9.

The judge concluded that the Defendant had made recommendations to the Claimant and that this constituted the giving of advice. The judge made clear that advice has to be distinguished from merely giving information, the former involving opinion and reference to advantages and disadvantages. A finding of advice would not be affected by evidence that the Claimants had their own ideas about investments.

Turning to suitability of advice, the judge suggested that it was necessary only for reasonable steps to be taken by advisors to ensure suitability. Factors for advisors to consider included: the knowledge and experience of the investor; the financial situation of the investor; and the investment objectives of the investor. Adequate recording of these factors was irrelevant. On the facts the judge felt there was nothing to suggest that unsuitable advice had been given when products had initially been bought, even if the advice had become unsuitable when circumstances changed in 2008.

Link: Zaki and Others v Credit Suisse (UK) Limited [2011] EWHC 2422 (Comm)

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