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Battleground of claims

Battleground of claims

By John Tesarsch


he Future of Financial Advice reforms enacted by the federal government have been the subject of widespread debate. The reforms commenced operation on 1 July 2012, and became mandatory for financial advisers and licensees on 1 July 2013. They were intended to improve the trust and confidence of investors in the financial services sector, and to safeguard the quality of financial advice.1 That said, significant concerns remain as to whether certain advisers are sufficiently skilled to provide advice which may put their clients’ entire life savings at risk.2 Many claims against financial advisers are resolved by way of dispute resolution procedures provided by banks and other financial institutions or by the Financial Ombudsman Service. There are relatively few judicial precedents. Accordingly, for claims which are litigated, there can be considerable uncertainty as to the standards that courts will expect of financial advisers. The causes of action available against financial advisers include breach of contract, negligence, and breach of fiduciary and statutory duties. This article addresses issues which, in my experience, can be significant areas of dispute in claims against advisers. Claims in contract and tort For claims in contract and tort, it is first necessary to determine the scope of an adviser’s retainer. In the absence of a retainer letter, this may be difficult. It may then be necessary to review all the relevant correspondence and to seek instructions concerning all relevant discussions to identify the extent of the adviser’s contractual responsibility.

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