Slater and Gordon has warned that thousands of Australians who invested in the collapsed LM First Mortgage Income Fund on the basis of bad financial advice could soon lose their right to recoup losses through litigation.
Commercial litigation lawyer Mark Walter said many Australians lost their life savings after financial advisors recommended investing in various products managed by the fund which went into administration this week.
He said Slater and Gordon had already issued legal proceedings against financial advisors on behalf of a number of those investors and more proceedings would be issued in coming weeks.
However, Mr Walter said a six-year time limit generally applied for anyone wanting to sue, meaning anyone who invested in 2007 during the pre-GFC boom period needed to obtain immediate legal advice.
“We believe there is a large number of viable claims against financial advisors who recommended this and other high-risk products that will be affected by the time limit,” Mr Walter said.
"It's important that people exercise their right to hold their advisors to account and seek legal advice before it is too late.”
He said the same applied for a number of other financial products that collapsed as the GFC took hold, including the Basis Capital funds and the Premium Income Fund.
“We have found that funds like LM were particularly popular among financial planners in communities where there are large populations of retirees with money to invest,” Mr Walter said.
“The people we are talking about are typically risk averse and conservative and have relied on the professional advice of financial advisors to invest in these funds. It is debatable whether these funds were appropriate for them given their conservative needs."
Mr Walter said investors generally had a low awareness around their right to recoup funds from advisors lost to bad advice.
“In our experience, very few people have any sense that their losses may be recoverable until they seek advice and for many of the people who have found themselves in this unfortunate situation, it's important to seek advice about their rights and the recovery process,” he said.
Since the height of the GFC in 2008, Slater and Gordon has helped thousands of Australians who lost money after following bad financial advice recoup funds from their advisors.
The firm offers a range of products to minimise the risks associated with the recovery process, including insurance against costs and litigation funding.