Euroz Hartleys Securities to Pay $134,000, says AFCA
Euroz Hartleys Securities has been held accountable by AFCA for providing inappropriate advice, leading to direct losses for the complainants.
The Complaint
The complainants, Company A and Company B, are represented by one of their directors, Mr K. Company A makes the complaint in its own right, and as the corporate trustee of an SMSF. Company A, Company B, and the SMSF are collectively known as the complainants.
In 2010, Mr K engaged Mr R, an authorised representative of Euroz Hartleys Securities Limited, to provide stockbroking services to Company A and Company B. Mr K says:
- the complainants were retail investors
- the terms of engagement required Euroz Hartleys Securities to provide personal stock trading advice
- Euroz Hartleys Securities failed to provide appropriate advice because:
- its recommendations led to portfolios that were poorly diversified and overexposed to certain market segments and
- it did not warn him about the risks associated with the advice.
Euroz Hartleys Securities says the complainants were wholesale investors, and their agreements did not include portfolio management or review services. It also says Mr R provided appropriate advice within the scope of the agreements.
Issues and key findings
AFCA found that Mr. R appropriately provided the contracted services to Company A. Specifically, Company A engaged Euroz Hartleys Securities on a general advice basis and has not shown any of the product recommendations were inappropriate.
However, Mr R commenced providing personal advice to Company B after June 2013 and has not shown the recommendations were in Company B‘s best interests.
Euroz Hartleys Securities was also not able to demonstrate it had a reasonable basis for the personal financial product advice it provided to the SMSF as a retail client.
Why is the outcome fair?
Euroz Hartleys Securities‘ obligations changed from time to time and so it is fair to only hold it to the standards which applied at the point of each recommendation being made. Where Euroz Hartleys Securities failed to meet those standards, it is responsible to the relevant complainant for the direct losses caused by those failures, less any contribution by the relevant complainant.
Determination
This determination was partially in favour of the complainants.
Within 28 days of the date, this determination is accepted by the complainants, the financial
firm must pay:
- to the SMSF:
- $94,008.82 plus compound interest calculated at a rate equivalent to the Australian Consumer Price Index (CPI) from 12 October 2015 to the date of payment; and
- $2,368.21 plus compound interest calculated at a rate equivalent to the Australian Consumer Price Index (CPI) from 23 January 2018 to the date of payment
- to Company B:
- $35,412.48 plus compound interest calculated at a rate equivalent to the Australian Consumer Price Index (CPI) from 29 May 2013 to the date of payment; and
- $2,579.20 plus compound interest was calculated at a rate equivalent to the Australian Consumer Price Index (CPI) from 23 January 2018 to the date of payment.
Getting Legal Help for Bad Financial Advice
Contact us if you’re questioning the advice you received from a financial advisor and consider taking steps against them. We are committed to ensuring our clients receive the best possible advice and guidance on their situation, especially in financial matters. You can contact us online, call us at 1300 433 533 or email us at enquiry@fdlegal.com.au.
