A financial adviser's insurer has agreed to pay $320,000 to settle a complaint after Financial Services Complaints Ltd (FSCL) found an advice failure the client had never raised. The adviser had no file note of the call to support his account.
The insurer's offer rose about 45% from its first figure, and the final increase followed FSCL's finding on advice outside the original complaint.
The client, Stina, argued that money for a house purchase should have stayed in cash or similar. She said she had told the adviser from the outset she wanted to buy a house and invest only $1 million.
The insurer accepted her view and offered $221,000, made up of $216,000 for losses on the funds used for her new house and $5,000 for stress. It later raised the offer to $247,000.
FSCL then examined an April 2025 phone call that Stina had not complained about. It found the advice on that call was not that of a prudent financial adviser and considered the offer should increase.
The insurer lifted its offer to $320,000, about 81% of her overall loss of $396,267.81 including tax and fees, and she accepted. FSCL's process is inquisitorial and, unlike a court, it can identify issues a consumer has not raised.
Massey University financial services expert Claire Matthews said the case seemed unusual. "Based on the limited information available, it doesn't appear to have been good advice," she said.
Since July 18, 2024, all four approved dispute resolution schemes can award up to $500,000 plus GST for financial loss and up to $10,000 plus GST for non-financial loss.
Shortly after President Trump's tariff announcement, the adviser asked Stina to phone him urgently and advised her to sell everything because of tariff volatility, and she did.
Stina told FSCL he had not explained the risks or consequences of withdrawing her funds, nor that a sale would crystallise her loss. The adviser disputed this, but FSCL accepted her version.
Poor record-keeping, FSCL said, makes it harder to establish what was said, and without a contemporaneous note it tends to favour the consumer. It generally considers a consumer more likely to recall a discussion about their own finances accurately than an adviser who may speak with many clients in a day.
Under their licence conditions, advice providers must create timely and adequate records of their advice, keep them for at least seven years and make them available to the Financial Markets Authority (FMA).
Read more here.
The Code of Professional Conduct for Financial Advice Services requires suitable advice and reasonable steps to ensure the client understands it, including its risks and consequences.
The Code also applies to insurance brokers who give regulated advice. In a case published in July 2026, FSCL found a broker had breached Standard 5 by disclosing client information without consent, and the broker agreed to a $20,000 ex-gratia settlement.
Read more: Dual-client broker case ends in Code breach and settlement
In 2020, Stina attended the adviser's retirement planning seminar and later met him. He assessed her risk profile as 'growth' and her net wealth at around $2,500,000, and on the basis of his advice and income projections she retired and sold her house.
She had planned a smaller home, but he advised her to put all her money into shares and invested $2,300,000, almost the full sale proceeds. By early 2022, she could see the projections had been overly optimistic and returned to work.
She had also found a house, so the adviser arranged payments totalling $1,110,000 from her investments, by which time share values had declined.
Fees totalled $101,937.60, including $92,806.13 to the adviser, which Stina considered excessive.
FSCL said the fees seemed high but were set out in advance and within an acceptable industry range, albeit at the higher end, and an unspecified part of the settlement was understood to recognise fees for poor advice.
FSCL did not consider it reasonable to require full reimbursement because the Statement of Advice warned of volatility, and Stina may have suffered a loss anyway, with the outcome dependent on when she exited.
On April 9, 2025, the US paused most reciprocal tariffs for 90 days, and the S&P 500 rose 9.5% in a single day, its largest gain outside 2008.
In a case reported in 2024, an adviser paid $80,000 to a client who lost $200,000 after her $900,000 went into growth funds, although she said she wanted $400,000 for a home. FSCL said the adviser had not kept adequate records.
In a case reported in 2023, a firm paid $133,000 after a client's $500,000 for a first home went into a growth fund, with FSCL holding the firm responsible for 80% of the loss.
