Trethowans, a Salisbury- based firm of solicitors, has issued a writ against Sentinel Life on behalf of 37 pensioners who lost their money through the Bristol adviser Martyn Foster. The solicitors hope to retrieve more than pounds 500,000 on behalf of the investors. Mr Foster was jailed four years ago for gambling away more than pounds 1m of his clients' money.
Mr Foster sold his clients investment bonds in a variety of different companies including Norwich Union, Standard Life, Allied Dunbar and Sentinel Life, then owned by Aitken- Hulme International.
He squandered his clients money by 'churning policies', that is by unnecessarily switching them between bonds to earn extra commission. He also began to surrender policies early by falsifying clients' signatures.
Since then, many of the companies that held the bonds have made ex gratia payments to investors who have lost money. Sentinel, now owned by Century Life, has refused to pay out.
Tom Bish, a solicitor with Trethowans, said: 'Most of the money invested by the group represented pension and redundancy payments. We have been left with no alternative but to take proceedings against the company.' All the investments were made before the Financial Services Act came into force, which means that the investors are unable to claim on the Investors Compensation Scheme.
Many of the investors were former employees of Cadbury Schweppes in Bristol. One, John Clothier, is secretary of an action group of investors that is spearheading the compensation bid. Mr Clothier invested pounds 65,000 - a commuted pension and redundancy money - through Mr Foster, nearly two thirds of it in Sentinel Life bonds. The range of compensation claims against the company is from pounds 2,000 to pounds 50,000.
Mr Bish said many of the insurance companies had acknowledged liability or partial liability, and had paid out. 'Normally in these cases, investors can go to the Insurance Ombudsman to get a ruling. Unfortunately Sentinel Life is not a member of the scheme.'
Mr Bish said the policy surrenders were made over a short period and that Sentinel should have realised what was going on. 'In spite of exhaustive attempts by the group, Century Life has failed to acknowledge any degree of liability whatsoever. Accordingly, the Foster group has been left with no alternative but to take proceedings against Century Life.'
Jack Aspinwall, the Tory MP for Wansdyke, has also taken up the case on behalf of the pensioners.
Century Life refused to comment directly on the legal action but said it would be fighting it.