In Denning v Greenhalgh Financial Services Ltd, GFS, an independent financial advisor, successfully struck out the claim advanced by its client that it was in breach of its professional duty of care (in contract and/or tort) in that it had not conducted a detailed review of pension transfer advice given to the claimant by unrelated advisors eight years earlier. Denning alleged that GFS had breached its duty by failing to conclude that the earlier advice was defective, by not advising the claimant to pursue a complaint or claim against the first advisors, and by not advising on the applicable limitation periods.


In August 2000 Denning obtained advice from a financial advisor regarding the transfer of deferred benefits from his final salary scheme to a personal pension plan; the “critical yield” was explained as the most important aspect when deciding whether a transfer was likely to produce a higher pension on retirement than the preserved benefits under the final salary scheme. A transfer was carried out, and over the next few years, the financial advisor kept Denning updated on the performance of his personal pension. The pension was not achieving the required critical yield, and in 2007 a second transfer was made to an unsecured income plan. In 2008, Denning made a complaint to his financial advisor regarding the second transfer, and in 2009 Denning referred this complaint to FOS. Only at the end of 2010 did Denning raise concerns with FOS about the advice provided by his financial advisor in relation to the first transfer. The complaint relating to the first transfer fell outside FOS’ jurisdiction, the complaint being raised more than six years after both the transfer and the advice complained of; Denning knew or ought to have known that he had cause for complaint by May 2006 at the latest. FOS upheld the complaint about the second transfer in that it was unsuitable, but rejected it on the basis that there was no loss, so it was inappropriate to make any award.

Denning issued proceedings against GFS in December 2014 on the basis that GFS had failed to review the advice of the first financial advisor and advise Denning of the potential complaint or claim relating to that transfer. GFS argued that it did not owe a duty of care to advise Denning on the merits of the first advisor’s advice.


Whilst reviewing the case law on when a professional can owe a duty to advise outside the scope of its retainer, Green J made clear that the starting point is that the extent of a professional’s duty will be determined by the terms and limits of the retainer. Green J distinguished the case from Credit Lyonnais SA v Russell Jones & Walker which establishes that a professional’s duty may extend beyond the scope of the retainer if, whilst performing the retainer, the professional comes across information which would lead any competent professional to advise upon a legal risk. Whilst Denning referred to the request for GFS to review his pension arrangements “generally”, arguing that such a term was broad enough in scope to have included advice and warnings on the earlier transfer, Green J was satisfied that GFS had not been under a duty to advise on the merits of that earlier advice and associated pension transfer.

GFS was at no point instructed to consider the merits of the earlier pension transfer advice, nor was it paid to advise on the issue; GFS’ advice was prospective only. The earlier advice had no substantive connection with the matters on which GFS was instructed to advise, and was “history and context only”. Denning did not give GFS information which allowed it to advise on the earlier advice and the alleged errors were not obvious. On the claimant’s case, GFS would have had to have given advice involving a hybrid of “financial and legal expertise”, requiring knowledge of the law or tort and limitation; GFS’ fee agreement emphasised that it was not competent to give legal advice, and GFS did not hold itself out as having legal expertise.


IFAs will be relieved that a client who failed to take action quickly enough against his previous adviser (and so was time barred) could not rely on that tardiness to try to hold the new adviser (who had nothing to do with the original advice) responsible.

The case is a useful reminder of the significance of a retainer letter in determining the extent of the duty owed by a professional and the importance of ensuring the existence of documentation to evidence what a professional is being instructed to do, and likewise, areas where it is not able to advise. Only in “obvious cases” will an extended duty to advise arise, requiring a close factual and legal nexus between the retainer and the matter on which it is alleged the professional has failed to advise.