Financial advisers and financial planners
Legal obligations
Financial planners and financial advisers must be licensed in
Australia before they can give you financial advice.
They must provide you with a financial services guide before
giving you any advice. That guide sets information such as how they
get paid, what connections they have with products or companies
that might influence their advice and how you can make a
complaint.
In many instances, financial planners and financiali
advisers are required to provide their advice to you in
writing.
For more information on the legal obligations of financial
advisers, view the 'investing' section on the ASIC MoneySmart website.
Lost money? Bad advice?
Not all bad advice is negligent - whether it is depends on your
precise circumstances, what you ask for, what you tell your
adviser, what they say to you and whether that is reasonable.
Are you entitled to compensation?
You might be entitled to compensation for losses you suffer
because of the financial advice you have received. Your financial
adviser may have:
- given you negligent advice
- breached fiduciary duties that he or she owes to you,
and/or
- breached sections of the ASIC Act 2001 and the
Corporations Act 2001, which together govern the conduct
of financial advisers.
The case study below gives an example of what might be a good
claim for compensation.
Having a claim is not the whole story - there is little point
chasing compensation if your financial adviser has no money and is
uninsured, or if his or her insurance is not sufficient.
Maurice Blackburn Commercial can assist you with frank
advice
We represent people who have suffered loss as a result of the
misconduct of their financial advisers.
We will provide frank advice about the prospects of your case
and the likelihood of recovering compensation. We will discuss your
objectives and personal circumstances and formulate a dispute
resolution strategy for you.
If your loss amounts to more than $150,000, your strategy may
involve negotiation, mediation, litigation or a blend of all
three.
If your loss amounts to less than $150,000, we may recommend
that you refer your dispute, initially, to the Financial Ombudsman Service
(FOS).
If you need some expert assistance, we can help you to prepare
an application to FOS and with advice throughout the dispute
resolution process.
Case study
Maree and Robert Walters, aged 57 and 62 respectively, were
looking forward to retirement. They hoped to have an extended
overseas holiday each year and to buy a small beach shack near
Inverloch. To help them achieve their retirement goals, they sought
the advice of their trusted financial adviser, Tony.
Tony recommended that they:
- establish a margin loan facility and use the equity in their
house to purchase a mix of Australian and International shares,
and
- invest $250,000 in "Mildura Olives", an agricultural managed
investment scheme.
Tony assured them that the investment strategy was "safe as
houses" and "low risk", as they had requested.
However, a series of devastating margin calls forced them to
sell their home. They are now unable to purchase even a small
apartment outright. Poor management at Mildura Olives, in
combination with pervasive drought and summer bushfires, resulted
in the winding up of the managed investment scheme. Maree and
Robert received only $50,000 out of the $250,000 they had initially
invested in Mildura Olives.
Furthermore, Tony failed to tell Maree and Robert that he had a
financial interest in the management company responsible for
Mildura Olives.
As a result of following Tony's recommendations, Maree and
Robert are financially ruined and unable to retire for the
foreseeable future. What are their legal options?
Maree and Robert may be able to recover their losses from Tony
(and, potentially, his employer or insurer) if they can prove that
Tony:
- breached the client services agreement
- failed to provide a reasonable standard of advice and service
to Maree and Robert
- breached fiduciary duties that he owed to Maree and Robert,
and
- breached sections of the ASIC Act and Corporations
Act.
If you would like more information about how Maurice Blackburn
Commercial can help you, contact our legal experts Neale Paterson or Lily Nguyen.