Topic: Financial Advice

An authorised financial adviser (AFA) advises his clients to invest in real property and refers them to a building company. The building company experiences severe difficulties and is placed into liquidation causing the clients loss. We investigated whether the AFA was responsible in any way for those losses.

Terence tried to arrange finance to save his factory. Terence signed a loan agreement but decided not to draw down the funds as it would not be enough to pay off the mortgage debt over the factory. Later, when selling the factory, Terence found that the lender he was to draw down the loan from had registered a caveat against the property to secure payment of lender and broker fees. Terence had to pay $44,000 to get the caveat removed. Can Terence’s lender and broker charge fees for a loan that was arranged but never drawn down?

Steven invested $8,000 in a growth fund only to discover it was worth $7,000 20 years later.

An insurance adviser attempted to rely on a poorly worded disclosure statement to justify passing commission claw back to his customers.

Due diligence costs when purchasing a house should be covered by the intended purchaser.

Iosefa and Teuila sign up for a savings plan to save for a house deposit. After finding out their savings weren’t earning interest, Iosefa and Teuila cancelled the agreement and tried to withdraw their money. The financial adviser who ran the saving plan accepted their cancellation but now he won’t release their funds saying he is owed a $4,995 fee. Can the financial adviser keep their savings?

In June 2015, Caleb spoke with a broker about securing finance to purchase a property to eventually develop. Caleb signed a mandate agreement setting out the finance terms he sought. The day before the property settlement the broker presented a finance offer on significantly different terms, and his brokerage fee of $23,500. Was Caleb required to pay the full fee?

Tim and Caroline said they were given advice that they would be able to claim back the GST component of a proposed property purchase, amounting to $112,500. When the IRD confirmed that Tim and Caroline could not claim back this amount, they make a complaint about John, their financial adviser.

Debt repayment plan unsuitable for complex mixed property ownership.

The Complainant felt forced to seek legal advice after her financial adviser would not redeem her investments.