There are growing calls for a review of all cases after the insurance giant is found guilty by the Ombudsman.

Zurich, the insurance giant, has been called on to review hundreds of cases involving two financial advisers, after it was found guilty of mis-selling for a second time by the Financial Ombudsman Service (FOS).

There have also been calls for the two men to be suspended, as they are both still advising investors, despite the verdict.

Zurich Independent Wealth Management was found guilty last month by the FOS of mis-selling financial products to John Aitken, from Ludlow, in Shropshire.

In March 2006 Mr Aitken was persuaded to move £292,000 of his money into a bond that brought him no tangible benefit but generated hefty commission of £17,500 for the two advisers involved.

This is not the first time that Zurich and the advisers in this case — J. P. Loveland and Gary Nolan — have been the subject of a successful complaint to the Ombudsman. Industry experts fear that this could be the tip of an iceberg.

Dennis Hall, of Yellowtail Financial Planning, a fee-based financial adviser, asks: “Why are the two people highlighted here still being allowed to give advice? If they are allowed to continue, isn’t there a danger that more mis-selling cases could surface in the next few years?

“I think the regulator should stop them working and insist that Zurich carries out a 100 per cent review of these advisers’ caseloads to see whether there are any other examples of mis-selling yet to be uncovered.”

Loveland and Nolan were both paid by commission. At the time Nolan was working for Zurich Independent Wealth Management. He now works for Openwork Market Solutions, a subsidiary of Openwork. Loveland was working for Openwork, a multi-tied adviser, which is 25 per cent owned by Zurich. He still works for Openwork as an appointed representative, though he conducts his business under the name of Hanover de Broke.

In 2006, Mr Aitken sought advice from Mr Loveland and Mr Nolan about his pension. They recommended that he invest his pension pot in an open annuity with London & Colonial (L&C), but using a Clerical Medical investment bond as a wrapper.

Mr Aitken was given no proper explanation of what value was to be gained from opting for Clerical Medical. He believes the real reason was to be found elsewhere. He says: “Buried in another document was an illustration showing that, if the recommendation was accepted, Zurich Independent Wealth Management would receive an immediate payment from Clerical Medical of £17,500. This represented an initial commission of 6 per cent of my pension pot of £292,000.”

The adjudicator for the FOS concluded that the Clerical Medical International Bond selected by Zurich was “unsuitable” for Mr Aitken. He added that Mr Aitken should not have had to pay the commission generated by the “unsuitable” bond. He ordered Zurich to restore Mr Aitken to the position he would have been in had he not been wrongly sold the Clerical Medical bond — an order with which Zurich has promised to comply.

In a smilar case in 2008, Zurich was found guilty by the FOS of mis-selling investment products to Barry McClean, of Gerrards Cross, Buckinghamshire, to pocket extra cash. The FOS concluded that Nolan and Loveland had wrongly advised Mr McClean to switch his income drawdown plan with Allied Dunbar to a similar income drawdown with Norwich Union — a move that allowed them to pick up £11,947 in commission.

The Ombudsman further found they were guilty of mis-selling when they transferred the pension pot a second time to L&C, because they routed the money unnecessarily through an investment bond with Clerical Medical, rather than allowing L&C to administer the fund and Seven Investment Management to manage it, as the client had requested.

Mr Hall says: “With two cases like this that are almost identical, shouldn’t Zurich, as a matter of urgency, do a review of all these advisers’ cases involving pension transfers to see whether other problems exist?”

Experts say that this latest case of commission-driven mis-selling shows why the Financial Services Authority is right to seek a ban on commission from financial products by 2012 as part of its Retail Distribution Review (RDR).

Andrew Fisher, chief executive of Towry Law, a fee-based wealth adviser, says: “As long as people are incentivised by commission to do the wrong thing, they will. It is hoped that the RDR will result in a big reduction in mis-selling cases of this kind. However, it is not due to come into effect until the end of 2012. That leaves nearly three years in which people who don’t care about their clients may continue to make hay.”

Zurich refused to confirm whether it would review all cases relating to Nolan and Mr Loveland. However, a spokeswoman for the company said: “Both Nolan and Mr Loveland no longer represent Zurich, but we can confirm that we have no outstanding complaints of a similar nature concerning these two advisers. We take great care to ensure that advisers who recommend Zurich products to customers do so in a manner that is fair and compliant. If and when we find evidence that this has not happened then we may take action. ”

Both Loveland and Nolan were given the opportunity to comment, but declined.

A spokeswoman for the FSA says it could not reveal whether it would be investigating the activities of Zurich or Mr Loveland and Mr Nolan.

Article from TimesOnline.