The Not So Remote Risks Of Recommendations

Those with an interest in the extent to which banks can be held liable for failed investments which they have sold will already be familiar with the case of Rubenstein v. HSBC Bank plc [2011] EWHC 2304 (QB), decided at first instance last year. The Court of Appeal¹ has now approved the principal findings in that case on how banks must address a client's investment needs when considering the suitability of recommendations. At the same time, it has overturned the controversial finding that losses suffered as a result of negligent advice were unforeseeable because of the unprecedented market conditions of 2008 and were therefore too remote to be recoverable.

Facts

In August 2005, Mr Rubenstein, a private customer for the purposes of the FSA rules then in force, decided to invest the proceeds of the sale of his home whilst he searched for a new property. Mr Rubenstein told Mr Marsden, a financial adviser employed by HSBC (the Bank), that he wanted an investment that,