Phillip Capital To Pay Nearly $100,000, Says AFCA
Phillip Capital has been directed by AFCA to compensate Ms Y for unauthorized trading and disregarding her instructions. The financial firm must pay nearly $100,000 in compensation for the trading losses incurred.
Complaint
The complainant, Ms Y, had two options trading accounts with Phillip Capital Limited. She says the financial firm’s advisor, Ms H:
- conducted unauthorised trading on both accounts.
- conducted trades and transferred funds from an attached bank account without her authority.
- acted contrary to her explicit instructions to cease trading and close her accounts.
The financial firm says Ms H acted within the terms and conditions of the trading accounts and only provided a general advice service to the complainant. Further, the financial firm says:
- the complainant is a sophisticated/wholesale investor as defined under s708(10) and 761G of the Corporations Act 2001 (Cth) (the Act) and
- the complainant and the advisor were personal friends.
The complainant seeks compensation from the financial firm for all trading that occurred on her accounts without her authority.
The case manager has already provided a recommendation on these issues. The recommendation was in favour of the complainant.
Issues And Key Findings
Were The Findings In The Recommendation Correct?
The findings in the recommendation were broadly correct and are adopted in part in this determination. After considering further submissions provided after the recommendation, AFCA is satisfied the complainant’s contribution to her losses is 15% and the financial firm must compensate her 85% of those losses.
Why Is The Outcome Fair?
The financial firm’s advisor breached her fundamental obligation to act on client instructions. Not only did Ms H act without client instructions but also contrary to client instructions. Given It is fair that the financial firm compensates her trading losses.
Reducing the compensation by 15% is also fair as it recognises Ms Y’s initial willingness to take on some risk, and her awareness that trading was occurring without her proper authority.
Determination
This determination is substantially in favour of the complainant. The complainant has 30 days
to accept the determination. If the complainant accepts, the financial firm must pay:
- $97,664.90 plus interest
Legal Help After Bad Financial Advice
If you believe you’ve received bad financial advice and would like to discuss your experience with us, reach out to our expert legal team. 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.
