FOS fires broadside at dawdling advisers
The Financial Ombudsman Service (FOS) has sent financial advisers a clear message that they need to deal with client requests in a timely and efficient manner by ordering two licensees to compensate their clients.
In the first determination, a client who was living overseas sent instructions by e-mail on March 3, 2009, to his Adelaide adviser to liquidate his superannuation and allocated pension accounts, however, his adviser was on leave.
There ensued days of confusion, with the client saying he did not receive the adviser’s out-of-office e-mail reply.
The complainant’s claim was for $42,276, representing the decrease in the value of his investment between the date of his sell instruction (March 3, 2009) and the date the instruction was executed (March 11 to 27, 2009).
The FOS panel found the licensee had breached its duty of care. It said the adviser had failed to tell the client, who had signed up for the adviser’s highest level of service, that he was going on leave, despite knowing the client was considering selling his investments during that period.
He denied liability, saying the out-of-office reply specified instructions for contacting the office in urgent matters.
The panel found the standard of care given was lower than was originally held out to the client. As such, FOS found that regardless of whether the auto-reply was sent or received, it was in itself an insufficient way for the member to meet their duty of care.
In its final decision, FOS found the member could not be held accountable for losses incurred after the client withdrew the sell instructions on March 7. The member was ordered to pay $8,781 to the client for losses incurred.
Another financial planner was ordered to pay $12,907 to a client for losses incurred when the client’s request to switch their allocated pension investments from shares to cash were not responded to for over a month in late 2008.
The client said he had made a written request to switch his investments from shares to cash on September 18, 2008, but it later transpired that the request form was missing, with the sell order not executed until November 20.
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
