Emptage v Financial Services Compensation Scheme

The Court of Appeal dismissed an appeal by the Financial Services Compensation Scheme in this test case, concerning the quantification of compensation claims for mortgage mis-selling.

Acting on the negligent advice of an independent financial adviser, the claimant remortgaged her home, and used the proceeds to invest in overseas property.  The property investment failed, and she was left with a mortgage she was unable to repay.

FSCS argued that the claimant should not receive compensation reflecting the value of her lost property investment, because while the mortgage was a regulated product, her investment in overseas property was not.

The Court of Appeal held that the FSCS’s discretion as to the quantum of compensation did not enable it to withhold compensation for the lost property investment, in circumstances where it (the FSCS) had accepted that the IFA had been in breach of duty in failing to consider how the claimant would be able to repay the principal at the end of the mortgage term.

Monica Carss-Frisk QC and Andreas Gledhill appeared for the Financial Services Compensation Scheme.