OLG Naumburg: Advisors are liable for losses and faulty advice
Investment brokers and insurance brokers like to advertise company and private pension schemes for entrepreneurs as “seizure-proof and insolvency-proof”. However, this is not the case, as a recent ruling by the OLG Naumburg (Case No. 1 U 74/07) of 17 January 2008 shows.
The case An insolvency administrator withdraws the company and private pension plan completely, all pension assets. The car dealership owner thus loses his endowment policy and private pension insurance: he had secured the endowment policy “by pledging it to the wife” – it later turned out that the pledge was invalid. The insurance customer had also granted his wife the subscription right to the pension insurance. This did not help either – the insolvency administrator confiscated the entire assets of both contracts to the estate.
Typical Mistake It is typical for life insurance agents to receive the “free” pledge or right to draw forms pre-printed by the insurer. Just as often, it then turns out that either the content is legally incorrect and/or how to deal with it is not known: So it then happens that the insurance customer only realises in insolvency that he is not only dealing with free, but above all with “legally ineffective” agreements: This means that the customer loses his entire pension provision and that of his family.
Condemnation The receiver cancels all life insurance policies. In the case decided, the insolvency administrator had used all the money from the two insurance policies to pay the court and procedural costs. There was therefore no (partial) debt relief at all. The entrepreneur had applied for the “regular insolvency proceedings” with higher costs for insolvency trustees and court – in case of alternative private insolvency these costs would not have been incurred. And the legal dispute with the insolvency administrator over the two contracts had finally contributed to the increase in the costs of the proceedings, including the costs incurred by the insolvency administrator. The entrepreneur had long since discontinued his business when the application was filed, which is why the less expensive consumer insolvency proceedings would also have been eligible. Therefore, the legal advisor was held liable for the additional costs and was sentenced.
Liability cases on the rise However, intermediaries and advisors of occupational and private pension schemes are also liable for incorrect advice. Especially when no legal advisor can be held liable and now that the injured parties know that the advisor or agent is backed by a solvent liability insurer, the number of liability cases is increasing. As a rule, these persons are hardly ever trained to check complex legal issues and model forms for effectiveness and to ensure correct application. Only the delegation of responsibility to suitable professionals can be exempt from liability here – the liability insurance of the occupational pension consultant generally does not cover damages due to incorrect tax and legal advice.
by Dr. Johannes Fiala
by courtesy of
www.pt-magazin.de (published in P.T.Magazin, issue 5/2008, pages 36-37)
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About the author
Dr. Johannes FialaPhD, MBA, MM
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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