South west investors who lost their life savings in high-risk investments as a result of bad pre-GFC financial advice are pursuing legal action against a local financial advisor to recoup losses.
Slater and Gordon commercial lawyer Jessica Latimer said close to 20 residents in the Portland, Hamilton and Warrnambool areas who had lost millions of dollars during the GFC had come forward since February this year.
Ms Latimer said 12 were from the Portland area alone, with one investor losing $500,000.
“We’re talking about farmers, retirees, cleaners, factory workers and professionals and some of them have lost their entire life savings,” Ms Latimer said.
“A common thread between them is that they all acted on the advice of the same financial advisor who recommended certain high-risk investment products which were entirely inappropriate for investors in their circumstances.”
Ms Latimer said the financial advisor in question was from Victoria’s south west.
The enquiries followed reports in local media outlets in February about a Slater and Gordon client from Portland who was successful in recouping a significant portion of the six-figure sum he invested in a high-risk fund at the advice of his financial advisor.
Ms Latimer said the investors had all tied up their savings in the high-risk Premium Income Fund and the LM Mortgage Fund investment products, which both collapsed during the GFC.
“We believe there are many more people in the same situation who are yet to come forward,” she said.
“From our experience, very few investors realise that some losses are recoverable when their investment choices are guided by inappropriate advice they have obtained from a professional.”
Ms Latimer said financial advisors could be pursued under the Corporations Act and through the civil courts if they were negligent in their client dealings.
“In much the same way that a doctor is required to diagnose a patient and prescribe a treatment, financial advisors are required to match a client’s investment portfolio to their investment objectives,” she said.
“It would never be appropriate to, for example, advise a retiree with no means to back up their investments to put all their funds into a high-risk product.”
Ms Latimer said, while the number of clients with similar claims against the advisor was significant, the fact that each had different individual dealings with the advisor effectively ruled out the prospect of a class action.
“It’s important that anyone who believes they were the victim of bad financial advice prior to the GFC seeks immediate legal advice as there are strict time limits for taking legal action to recoup any losses,” Ms Latimer said.