IFSO goes to court to secure payment

In a first the Insurance & Financial Services Ombudsman has gone to court to enforce a ruling made against an adviser.

Thursday, September 26th 2024, 6:00AM

The ombudsman had made a ruling against a financial adviser, Kevin Hartfield, ordering him to pay a client $53,982.83 in a decision made in October 2021.

Hartfield had not paid his clients forcing the IFSO to apply to the District Court in New Plymouth for enforcement.

Hartfield argued, that he was no longer a member of the scheme; along with claims that he had not provided investment advice, a referral fee was not hidden and that the component off the award relating to interest costs was unjustified.

In an oral judgment Justice Greig said Hartfield was "attempting to relitigate the original outcome of the complaint made against him."

"It cannot be litigated in this way," he said referring to the rules around the scheme.

He said he can only modify the terms of the binding settlement "only if I am satisfied that the terms are 'manifestly unreasonable'”. He went on to say the terms of the settlement were not "manifestly unreasonable."

The judge made it clear that even though Hatfield was no longer a member of the scheme he was when the complaint was made.

He also expressed some sympathy for Hartfield but went on to say that he could only challenge the decision by seeking a judicial review.

"I do note that this is a difficult matter for Mr Hartfield, and at a personal level he engenders some sympathy. He is now aged 73. He has worked in the financial services industry for 40 years without complaint, he tells me.

"I do not doubt for one minute that he genuinely feels that the decision made by the ombudsman is wrong. But his opportunity to challenge that does not arise in this Court; it should be by way of judicial review and should have been some time ago."

The judge ordered Hartfield to pay $53,982.83 plus interest and also to pay the costs and disbursements incurred by the ombudsman.

Insurance and Financial Services Ombudsman Karen Stevens said this is the first enforcement proceeding IFSO has had to take against a Participant.

There is a problem with the process, in the sense that our Awards (only a handful in nearly 30 years and only in the last few against financial advisers) should be immediately enforceable, but an amendment to the FSP Act required the District Court to make an order to enforce. It imposes an extra cost on the IFSO Scheme and also means a longer process for a consumer to have to go through."

Tags: IFSO