Morgan Stanley required to pay former client almost $100,000 for bad advice

Recently a client of Morgan Stanley successfully obtained an AFCA decision against Morgan Stanley for bad financial advice they received.  In the complaint, the client alleged that they had received advice from a Morgan Stanley advisor to invest an inheritance in 75% growth assets. It was also alleged that the investments purchased lacked diversification which was beyond their risk profile.

The Advice commenced in 2019 and in December 2020 the client signed a wholesale investor certificate.

Morgan Stanley responded to the Complaint stating that the advice was suitable and that the complainant was properly assessed as a wholesale investor.  Consequently, important consumer protections in respect of the advice no longer applied.

AFCA held that Morgan Stanley had provided numerous Statements of Advice to their client prior to the wholesale investor certificate being signed and that after this certificate, personal advice was still provided.  Importantly AFCA referenced that Morgan Stanley’s own records identified that the advice was provided on the basis of their personal circumstances.  AFCA held that the complainants were moderate investors, and they would have been $99,878.61 better off had they received appropriate advice.

This AFCA case serves an important reminder that customers who have been identified as wholesale investors can pursue their financial advisor for bad financial advice.  If you believe you have been provided bad financial advice contact FD Legal on 1300 433 533 or enquiry@fdlegal.com.au.  We are committed to assisting Australian’s recover their lost investments from bad financial advice.