Can you sue your financial advisor?

Have you lost money because of poor advice from a financial advisor? You may be able to sue for compensation.
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When it comes to managing our finances, we often rely on the expertise and guidance of financial advisors. However, there may be instances where their actions or advice fall short of our expectations, leading to financial losses or other negative consequences. In such cases, it is important to understand when you can sue your financial advisor for compensation and the steps involved in pursuing legal action in Australia.
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What Duty does your Financial Advisor owe you?

In Australia, a financial advisor has a duty of care towards their clients. This duty of care requires the advisor to act in the best interests of their clients and to provide advice that is appropriate and suitable for their individual circumstances. The advisor must exercise reasonable skill, care, and diligence in providing financial advice and must prioritise the client's interests above their own. They should also disclose any conflicts of interest that may affect the advice given. This failure to meet these obligations can result in disciplinary action or legal action to recover compensation.

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Here are some examples of cases where financial advisors have been sued.

‍Inappropriate investment advice: A financial advisor may be sued if they provide advice that is unsuitable for a client's risk tolerance, financial goals, or investment objectives, resulting in significant financial losses.

Failure to disclose conflicts of interest: If a financial advisor fails to disclose any conflicts of interest that may influence their advice, such as receiving commissions or incentives for recommending certain products, they may be subject to legal action.

Negligence: Financial advisors can be sued if they are found to have acted negligently or breached their duty of care towards their clients, resulting in financial harm or losses.

Misrepresentation or misleading conduct: If a financial advisor provides false or misleading information about investment products, services, or potential returns, they may face legal action for misrepresentation or engaging in misleading conduct.

Breach of fiduciary duty: Financial advisors have a fiduciary duty to act in the best interests of their clients. If they prioritise their own interests or engage in self-dealing, they may be sued for breaching their fiduciary duty.

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When might it be difficult to sue your financial advisor?

There are however circumstances when you might not be able to sue your financial advisor, such as

General advice: If the financial advisor provides general information or educational guidance without giving specific advice tailored to your individual circumstances, it may be difficult to pursue legal action.

Disclaimers and limitations: If the financial advisor has included disclaimers or limitations of liability in their agreements or contracts, it may restrict your ability to sue for certain types of damages or losses.

Time limitations: There are time limits, known as statutes of limitations, within which legal action must be initiated. If the time limit has expired, you may lose the right to sue.

Lack of evidence: If you are unable to provide sufficient evidence to prove that the financial advisor breached their duty of care or caused you harm, it may be challenging to pursue a successful legal claim.

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So what are the steps in pursuing legal action?

‍1. Seek legal advice from the right lawyer
Engaging a lawyer who specialises in financial disputes is crucial. They will guide you through the legal process, assess the strength of your case, and provide advice on the potential outcomes and costs involved. A lawyer will also help you understand the relevant laws and regulations that apply to your situation.

2. Lodge a complaint:
Before initiating a lawsuit, it is generally recommended to file a formal complaint with the Financial Firm. This step allows the Financial Firm to investigate the matter and potentially take disciplinary action against the financial advisor.

3. Mediation and negotiation:
In many cases, parties involved in a financial dispute are encouraged to engage in mediation or negotiation to reach a settlement before proceeding to court. This process can save time, money, and stress.

4. Commence legal proceedings:
If mediation or negotiation fails to resolve the dispute, you may need to commence legal proceedings. Financial Dispute Legal will guide you through the necessary steps, including drafting and filing the appropriate legal documents, serving the financial advisor with a statement of claim, and preparing your case for court.

5. Court process and resolution:
Once the legal proceedings are underway, both parties will present their arguments and evidence before a judge. The court will assess the evidence, hear testimonies, and make a decision based on the merits of the case. It is important to note that court processes can be lengthy and complex, requiring patience and perseverance.

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If you have lost money due to bad financial advice, fraud, an insolvent debtor or insurance dispute and think you're entitled to a compensation claim, now is time to talk to the Financial Dispute Legal team to discuss your options.

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Our experienced lawyers handle financial advice disputes, scams, fraud, debt disputes, insurance complaints and even class actions on behalf of individuals and businesses Australia-wide.

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Fighting a bank, financial planner, insurance or debtor for money you're entitled to can be daunting but with Financial Legal Dispute on your side, you can have confidence in getting the result you deserve.