More and more people are choosing to invest in order to protect and secure their financial future and that of their family. It is important that you obtain correct general and financial advice from an experienced, well-informed financial advisor who has taken into account your objectives for investing and your financial situation and needs. In some circumstances, where you have not received the right financial advice you may be entitled to be compensated for the money you have invested.
Investors are often trusting of the advice and expertise of financial advisors and are effectively putting their futures in the hands of their financial advisor. It is important that you are aware that only persons permitted by law are entitled to give you financial advice. These persons are those that work for, or represent, a financial advisory business that hold an Australian Financial Services (AFS) licence. An advisory business that provides financial advice must provide advice that suits your personal circumstances, act efficiently, honestly, fairly and take legal responsibility for its employees and authorised representatives.
In this industry, advisory businesses set their own fees and can charge a commission on products they sell or an hourly rate for the work they do. In some circumstances, the financial advisor will receive a commission or remuneration for the products they sell.
In the recent decision of Fisher –v- Risk and Investment Advisors Australia Pty Ltd (ACN 104 922 394) (RIAA), Macrossan & Amiet represented Mr Fisher, who was the Plaintiff in relation to a claim for negligent financial advice.
Mr Fisher’s claim was established against three Defendants; RIAA, Mr Anthony Barlow and Whitsunday Financial Services Pty Ltd (ACN 106 411 312). Whitsunday Financial Services carried on business under the name “Neil Hartley & Associates”.
Mr Barlow was employed as a financial services advisor for Neil Hartley & Associates. The facts of the case are that in or about June 2008, Mr Fisher invested $200,000.00 in a commercial property product relating to storage sheds that were to be built in Mackay. The product was more commonly known as the “Ikin Product” and had been recommended by Mr Fisher’s financial advisor, Mr Anthony Barlow.
Mr Barlow was authorised by law to give Mr Fisher personal financial advice as he was an authorised representative of RIAA, who held an Australian Financial Services (AFS) licence. Consequently, RIAA provided financial advice to Mr Fisher through its authorised representative and is therefore liable for Mr Barlow’s actions.
Mr Barlow had provided financial advice to Mr Fisher in the years preceding the Ikin Product Investment. Mr Fisher had developed a professional relationship with Mr Barlow and had previously received and acted upon other financial advice provided by Mr Barlow without any loss.
Mr Barlow made false representations to Mr Fisher in relation to the Ikin Product. The investment was explained by Mr Barlow as an investment in two storage facilities that would be built at the Gateway Industrial Park in Mackay. Mr Fisher was further advised that they would receive title to the storage units upon completion and that interest would be paid on the invested monies until completion as the monies would be kept in a trust referred to as the “Mackay Trust”.
Acting on bad financial advice can have overwhelming consequences. In Mr Fisher’s case, he invested $200,000.00 in the Ikin Product which was effectively worth nothing. Mr Fisher brought a claim in the District Court at Mackay against all three Defendants on the grounds of negligence, breaches of the duty owed by each of the Defendants and breaches under the Corporations Act 2001 which set out certain obligations of financial advisors with respect to providing financial advice.
On 7 September 2012, judgment was given in favour of Mr Fisher. He was successful in recovering the investment loss, including interest and legal costs. If you have received negligent financial advice you should consider the options that are available to you.
We understand that it can be at times difficult to deal with your financial advisor or the Financial Advisor licensee with respect to seeking compensation for bad financial advice. If you have suffered loss as a result of negligent financial advice we can assist you in providing legal advice, making a formal complaint on your behalf to ASIC or the Financial Ombudsman Service or pursuing a civil claim for compensation.
Macrossan & Amiet are able to assist anyone else who may have been affected by the Ikin Product Investment, or who thinks they have received bad financial advice.
Read Part Two (December 2012) : My Investment went South – Can My Investment Advisor be Liable?
