Lawyers acting for more than 1,200 alleged victims of the pensions transfer scandal are poised to launch a mass legal assault on the insurance industry, claiming tens of millions of pounds of compensation. Some individual claims could exceed pounds 50,000.
Four firms of solicitors have set up a steering committee to co-ordinate the legal action against insurers. Others are expected to join them in the next few weeks.
Writs against several insurers, including Prudential, TSB, Allied Dunbar, Abbey Life, Albany Life and Norwich Union, have already been served or are in the process of being served.
Rod Knight, a solicitor working for Merseyside-based J Keith Park & Co, one of the law firms involved, said: "Our purpose in getting together is to share information on how individual companies are behaving. In our experience, they will sometimes act differently towards individuals with very similar cases.
"At present writs are being served on an individual basis. I expect that there will come a time, when we have enough clients whose cases are ready to go at once, when we launch action on behalf of 500 more clients at a time."
The steering committee believes that as its claims progress through the courts, they will be joined by thousands of others who have no faith in the compensation arrangements set up by the industry's watchdog, the Personal Investment Authority (PIA). Other law firms are also likely to join up.
Several of the law firms involved said yesterday that by far the largest number of their clients appeared to have been wrongly advised by the insurers' own salesforces or by tied agents working on their behalf. Only a relatively small minority of cases related to bad advice from independent financial advisers.
The legal challenge follows a report 18 months ago from the Securities and Investments Board, the City's main regulator, suggesting that up to 1.5 million people may have been wrongly advised to take out a personal pension and transfer out of their company scheme.
The PIA recently announced guidelines for compensating up to 350,000 of the most urgent cases. It hopes to deal with most of their claims by the end of the year. But insiders believe this timetable has already slipped.
The lawyers' campaign was yesterday attacked, however, for attempting to by-pass existing compensation arrangements.
Rod Kohn, a Bristol-based financial adviser and a council member of Fimbra, the still-functioning regulator for many IFAs, said: "They appear to be scavenging. I have been sent a letter from one of these law firms asking me to pass on details of anyone who has been badly advised.
"Many of their clients will not be aware that there are independent ways of seeking compensation which do not involve them in protracted and expensive legal battles.
"The PIA's own pensions unit is there to help them and the PIA Ombudsman can be appealed to if someone is dissatisfied with any offer made."
But Philip Ryley, an associate at the solicitor Ringrose Wharton, said: "The PIA's compensation scheme does not have powers to enforce reinstatement into an occupational scheme if the insurer believes it to be too expensive.
"Nor is there a right to insist on a pension equal to the amount lost when a person was advised to opt out. The question of expense does not come into it. If we win a claim on behalf of a client, the other party will have to pay costs."Reuse content