Financial advice disputes
FAQs - your questions answered
Receiving bad financial advice can have devastating consequences. Fighting a financial advice organisation and their insurer on your own when you have a dispute is difficult, tedious, time-consuming and involves a lot of fine print and red tape.
Maurice Blackburn will explain your legal rights and provide advice about whether you should take legal action to seek compensation.
Time limits apply for many financial advice dispute claims. Our lawyers are experts in this area of financial advice dispute law. We will make the process easier for you by providing straight-forward legal advice – starting with whether or not you may have a legal case – and your best course of legal action.
If you have received bad financial advice, you should start by making a formal complaint with your financial adviser and their company. If their response is unsatisfactory, you can appeal to the courts or to an industry complaints scheme such as the Financial Ombudsman Service (FOS). There are advantages and disadvantages when going to FOS or court, and there are important time limits for lodging disputes. Maurice Blackburn's experienced financial advice dispute lawyers can advise about this and represent you in the formal complaint stage as well as at FOS or in court.
Financial Ombudsman Service
- No fees charged by FOS
- Costs neutral - each side pays their own costs
- Disputes take longer to resolve (currently 18 months - 2 years)
- Settlements less likely
- No compensation for indirect loss
- $280,000 cap on the compensation
- No $ cap
- Usually quicker than FOS
- Settlements common
- Discovery compulsory
- Can award compensation for loss of opportunity
- Expensive if you lose
- Risk of adverse costs order
There are rules defining how financial advisers should deal with their clients. These include:
- Corporations Act 2001
- Australian Securities and Investments Commission's (ASIC) regulatory guides about minimum standards of behaviour
- Financial Planning Association of Australia's Rules of Professional Conduct
Your financial adviser is required to:
- know their client
- know the financial product they are promoting
- give appropriate advice, and
- make statutory disclosures.
If you've suffered loss as a result of negligent financial advice from a financial planner or financial institution you may be entitled to compensation.
Your financial adviser must understand your financial situation so they can provide appropriate advice to you. To do this, you are required to provide information about relevant personal circumstances. This will normally include:
- need for regular income (eg retirement income)
- need for capital growth
- desire to minimise fees and costs
- tolerance of the risk of capital loss, especially where this is a significant possibility if the advice is followed
- tolerance of the risk that the advice (if followed) will not produce the expected benefits
- existing investment portfolio
- need to be able to quickly cash-in the investment
- capacity to service any loan provided in relation to a financial product
- tax position
- social security entitlements
- family commitments
- employment security, and
- expected retirement age.
You can sue your financial adviser for bad financial advice such as:
- recommending a risky strategy that was not appropriate for someone in your circumstances
- failing to do an adequate assessment of your circumstances, needs and objectives
- failing to assess your tolerance for risk
- not warning you of the risks associated with the investments and investment strategy
- failing to monitor investments and respond to changing economic circumstances
- failing to explain the interest payable on loans taken out to make investments
- not diversifying investments and spreading risk across different sectors and industries
- recommending investments which pay high commissions to the adviser when other investments were more appropriate
- 'churning' – where too many trades are made, leading to high fees and commissions
- not conducting an analysis to see how you're likely to be affected when markets fall
- failing to disclose information and providing relevant documents, including a Financial Services Guide, Product Disclosure Statement, and Statements of Advice
- advising you to take out loans which you could not afford
- progressing with the investment when the recommendations and risks have not been fully explained and understood
- recommending a strategy when you don't have a secure source of income or sufficient resources/cash flow to fund repayments for investment loans (without relying on income from the asset that is invested)
- failing to implement the plan appropriately, and
- failing to review and revise the plan at regular interviews.
Maurice Blackburn has the largest superannuation, insurance and financial advice claims department in Australia. Our lawyers understand your needs, and have the expertise to back it up and recover what's rightfully yours.
Our team of experts help everyone from professionals and self-funded retirees, to mum and dad investors. We understand that in this industry, investors put their trust in the expertise of financial advisers and really put their lives and futures in their advisers' hands.
Maurice Blackburn can represent you on a 'no win, no fee' basis in group actions and individual claims. This means you only have to pay legal fees if you win; Maurice Blackburn shoulders the risk if your case is unsuccessful.
Maurice Blackburn's financial advice disputes lawyers have acted for clients against companies such as Commonwealth Financial Planning Ltd, Citigroup, Morgan Stanley Smith Barney, Wealthsure and Notolep Private Clients (formerly known as SAI/Peloton).
We are currently helping a young family on a single income sue their financial planner who advised them to borrow money (which they could not afford to pay back) to buy into a cattle droving investment that went broke. We are also helping two retired couples who were advised to invest their life savings/superannuation in high risk, speculative investments, where unfortunately, they lost most of their life savings. One couple was also advised to deposit a large sum into a self-managed super fund which led to a $69,000 penalty from the ATO.
No. Maurice Blackburn's financial advice lawyers will act for you on a no win-no fee basis. There is no charge for advice or for the first appointment if you do not win, or if you decide at this point that you do not want us to represent you.
For legal advice and help with a claim, fill in the contact Maurice Blackburn’s expert financial advice disputes team.
A successful financial negligence claim: Jeff's story
Jeff is a business man who suffered financial loss because of the negligence of a financial institution. Lawyers from Maurice Blackburn's Sydney office acted for him in his case.