Hooker puts advisers in red alert district
More financial advisers could follow Carey Church into court over finance company collapses, according to Turner Hopkins lawyer Andrew Hooker.
Thursday, June 16th 2011, 9:14AM 
5 Comments
“There are many before the courts as we speak against advisers alleging very similar things. The advice given was negligent because they were exposing the clients to much too many finance companies instead of spreading the risk across less volatile investments.”
He said the main reason more advisers hadn’t appeared in the dock – yet – was that most cases were settled out of court.
“I’ve personally got a number of them before the courts. I haven’t taken one to trial yet as they tend to settle out of court, a lot of them, so it’s quite unusual for them to go to court.”
He said that at one stage he had more than 150 people approach him with cases he said were similar to the Church case, but that many people lacked either the money or the energy to pursue legal action.
Another issue Hooker said the cases he has dealt with has thrown up is advisers inadequate professional indemnity (PI) cover.
“The financial advisers quite often advertise that they have PI insurance, but what I’ve found out is that a large number of the advisers have got PI insurance that only covers their legal defence costs but not any judgement, which is a waste of time.”
This inability of advisers to pay court awarded costs and fines – “I haven’t come across one yet that’s flush,” he said – meant he was also placing finance company trustees in his sights, teaming up with Slater & Gordon to launch a class action against trustees.
“One of the reasons I’m setting my sights on them is its more and more apparent that whilst advisers are culpable they’ve got no ability to pay.”
He said the sums advisers had offered in settlement so far were “peanuts.”
“Most of the cases settle because they’ve got no money, and so they just throw peanuts at your client and they take it as that’s all they’ll ever get, and I’m talking about people who’ve lost six or seven figures.”
He said the typical settlement figure he was being offered was around $10,000.
“And I’ve gone through these people like a dose of salts to make sure they’re not having me on,” he said.
Institute of Financial Advisers (IFA) president Nigel Tate said that while he was aware of several legal cases in the wake of the Church ruling, “we’re not overly concerned.”
He said the bulk of investors that lost money in finance company collapses had not been in the hands of advisers.
However, he did say “there might be 100 advisers in New Zealand who are concerned.”
Hooker remains determined in his efforts to seek financial redress for clients however.
“I’m absolutely passionate about the fact there’s a lot of really nice people out there who’ve lost everything. . . that’s why I’m moving heaven and earth to get some money for these people.”
| « Tate slams FAA levy | KiwiSaver mismatch a 'huge challenge' for advisers » |
Special Offers
Comments from our readers
Unfortunately there are many advisers who were unable (or unwilling) to determine the marketing spin from research – relying upon well packaged opinions from product manufacturers or their aligned research groups.
These entities remain in operation, peddling their bias views and opinions – and probably more flush than many of the financial advisers whom are being targeted. Precedent for apprehending this community exists as close as Australia, thereby delivering a much more efficient outcome for your clients.
Andrew?, not much mention of advisors fiduciary obligations in the judgement? I note the court acknowledged the advisor was a fiduciary, but stayed clear of actually imposing fiduciary obligations. Would have made a significant difference to the costs award as there's no reduction for contributory negligence with breach of fiduciary duties (I understand). Anyway, good luck with the crusade.
Commenting is closed
|
|
Printable version |
|
Email to a friend |
