Sydney-based HLB Mann Judd wealth management partner Michael Hutton told ifa the charges laid against him were not reflective of his financial advice philosophy.
“While going to court is never an ideal situation, we are confident that we always give appropriate advice to clients, and we believed it was important to defend this in the court of law,” he said.
“We are all relieved that the case is over and that the Federal Court has supported our position.”
The comments follow Justice Foster’s dismissal of a negligence claim by a former client, Vicki Jordan, against Hutton and AFSL-holder Lonsdale Financial Group seeking compensation for losses sustained investing through a self-managed superannuation fund, acting on Hutton’s advice.
Foster J ruled that Hutton was not liable for the losses, throwing out the applicant’s claim that the adviser had engaged in “misleading or deceptive” conduct or that HLB had “not sufficiently investigated Ms Jordan’s income needs”, thereby amounting to a breach of duty of care, according to the published opinion handed down on 9 April.
The court ruled that Hutton had made a reasonable assessment of Ms Jordan’s risk profile and explained the various managed funds in which she invested sufficiently in the statement of advice and other relevant documents.
“Given my findings on liability, it is not necessary for me to consider the question of damages,” Foster J concluded.
I applaud the judges decision to rule in favour of the financial planner after considering the evidence and in light of the far reaching effects of the GFC. Rulings that have come out of FOS don’t seem to take into account that investments are made as part of an overall portfolio and a clients declared risk profile / tolerance. I hope the Federal Court case sets a precedent for FOS to follow when deliberating similar claims.
What should be added to this article is that the client would be liable for the advisers costs. which I imagine would be in the order of $50,000 – $100,000 because she lost the case. Perhaps the journalist should point this out. Consumers should be aware whilst FOS is “free” losing the case isn’t. Again the adviser is blamed for the markets function. The adviser deserves much applause for fighting this and winning. And the kangaroo court that is FOS should look at the facts before persecuting client complaints.
I may be opening a serious debate, however, why would an SMSF member use managed funds? SMSF members I know, are just that so as to be more selective in their choices and move away from fund managers. Once again I say, advisers don’t lose clients money, product suppliers do.
Amazing isn’t it! A client invests into managed funds or shares after seeking advice from an adviser and when they sustain a loss the first thing they want to do is sue the financial planner with the backing of ASIC and the FOS, throwing everything they can at the adviser and hoping something will stick.
I take my hat off to the adviser for sticking up for what he knew was right and not going down without a fight.