Financial Planners and Advisers - Legal Obligations

To give financial advice, financial planners and advisers must be licensed in Australia.

They must provide you with a financial services guide which sets out information such as how they get paid, what connections they have with products or companies that might influence their advice and how you can make a complaint.

In many instances they are required to provide their advice to you in writing.

For more information on the legal obligations of financial advisers, click here to view the ASIC FIDO website.

Have you lost money or received bad advice?

Not all bad advice is negligent – whether it is depends on your precise circumstances, what you ask for, what you tell your adviser, what they say to you and whether that is reasonable.

Are you entitled to compensation?

You might be entitled to compensation for losses you suffer because of the financial advice you have received, if your financial adviser has:

given you negligent advice;
breached fiduciary duties that he or she owes to you; and/or
breached sections of the ASIC Act and the Corporations Act, which together govern the conduct of financial advisers.

Has my financial adviser given me negligent advice?

Your financial adviser may have given you negligent advice if:

they owed you a duty of care;
they breached that duty of care; and
you suffered loss as a result of that breach.

Generally, your financial adviser will owe you a duty of care if:

you rely on their advice; and
it is reasonably foreseeable that you will suffer loss if they do not exercise reasonable care and skill when providing you with advice.

The financial adviser may have breached that duty of care if they failed to exercise reasonable care and skill in giving you advice. It is not necessary, however, that they exercise extraordinary skill in giving you advice.

The loss you suffer must result from the financial adviser’s breach of the duty of care that he or she owed you. The loss cannot be too remote.

Has my financial adviser breached the fiduciary duty that they owe to me?

Your financial adviser may be a fiduciary if:

you trust and rely on them;
you - and they - expect that they will act in your best interests.

If a financial adviser is a fiduciary, then they must place your interests ahead of theirs and not abuse the reliance that you place in them.

For example, the “fiduciary” financial planner must recommend investments that are in your best interests – not investments that maximise the commissions that they receive.

**Has my financial planner breached their obligations under the ASIC Act or the Corporations Act?**

The ASIC Act and the Corporations Act impose a variety of obligations on financial advisers.

Under the ASIC Act and the Corporations Act, financial advisers must:

not engage in unconscionable conduct or misleading and deceptive conduct;
not make false or misleading statements;
provide their services with “due care and skill” (a term to this effect is implied into all contracts between financial advisers and their clients);
provide their services efficiently, fairly and honestly;
have a reasonable basis for the advice that they give you;
provide you with a variety of documents such as financial services guides and statements of advice.

I think I have a claim - what should I do now?

If your loss amounts to less than $150,000, you may be able to resolve your dispute using the Financial Ombudsman Service (FOS).

However, if your loss amounts to more than $150,000, your strategy may involve negotiation, mediation, litigation or a blend of all three.

Remember, having a claim is not the whole story. There is little point chasing compensation if your financial adviser has no money and is uninsured, or if his or her insurance is not sufficient.

You must also ensure that your claim is brought within the strict time limits which apply. If you are in doubt, you should contact a lawyer immediately and they will tell you whether the time limit for making a claim has expired.

We are an independent legal referral service. We have access to specialist lawyers who can advise you of your rights. Complete the Contact Form to find out more.

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