Two lawyers look at Provincial action
The Financial Planners and Insurance Advisers Association is condemning advisers who recommended clients invest a disproportionate amount of their wealth in a single finance company.
Tuesday, June 20th 2006, 9:46AM
by Jenny Ruth
At least two lawyers are investigating the possibility of suing advisers who recommended Provincial Finance’s debenture stock, particularly those who put a disproportionate amount of their clients’ wealth into the collapsed company.FPIA interim chief executive Ross Butler says advisers should be recommending that clients spread their risks and that concentrating on a single investment "is just asking for trouble."
A website running last week, but closed down now shows, some Provincial investors had relatively large sums invested in Provincial, some running into six figures. They included one unfortunate individual who had parked most of the proceeds of the sale of a house with Provincial while searching for another house.
Butler says he has also heard that some advisers had pressured Provincial to "muscle up" commission payments. "I wouldn’t support any members who had used such practices. That would be contrary to our code (of conduct)."
However, Butler warns that before any legal action can be taken it will have to be proven that clients have lost money. And so far, the FPIA hasn’t received a single complaint relating to Provincial. Butler says he’s encouraged by statements from receiver John Waller of PricewaterhouseCoopers that investors are likely to recover most, if not all, their investments over time and that some form of rescue or scheme of arrangement is still not out of the question.
Meanwhile, Christchurch man Trevor Knopp, who has part of his investments with Provincial and who set up the website, has closed it down after discovering it was a far too high maintenance proposition.
He says monitoring comments, and trying to ensure nothing libellous appeared, turned out to be a major headache and he was having to take time off work to manage it.
"I had really thought I would be putting the site up and forgetting it," Knopp says. "Within a day it became obvious I couldn’t do that."
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