Organise and litigate: EUFA tells investors

At least seven disputes between investors in failed finance companies and their financial advisers have been settled out of court in the last few months, share broker Chris Lee told a gathering of about 50 disgruntled investors in Napier yesterday.

Thursday, January 24th 2008, 6:52AM

by David Chaplin

Addressing the meeting organised by lobby group Exposing Unacceptable Financial Advice (EUFA) - part of its national 'Recovery Roadshow' - Lee said the successful litigation offered some hope to investors who had lost money due to poor financial advice.

He said after the spate of finance company failures his Kapiti-based firm had received over 1,000 emails from investors detailing "how and why they were ripped off by the financial planning industry".

Lee said just over 100 of those complaints came from Hawke's Bay representing approximately $40 million of losses, which was "disproportionate" to the region's size.

He also said Bridgecorp, Capital+Merchant, the Money Managers' FirstStep products and the ING CDO-based income funds featured frequently in the complaints sent to his firm.

While Lee admitted he has been tagged as "controversial" by the press, he said his main ambition now was to "empower people to not become victims of bad advice".

Suzanne Edmonds, EUFA founder and a relation of Lee's, also urged those who attended the meeting in the Marewa School hall to press forward with complaints against their financial advisers.

"About 40 people at our Hamilton meeting decided to launch a collective legal action," Edmonds said.

She said even those investors who have lost only small amounts in the finance company fiasco should pursue a complaint if their financial advisers had offered poor advice.

According to Edmonds, while EUFA could not take legal action on behalf of investors it would offer practical advice on how to do so.

The final speaker at the Napier meeting, Lyn McMorran, chair of the financial planning chapter of the Institute of Financial Advisers (IFA), said the industry body welcomed legitimate complaints against any of its members.

McMorran said the IFA had a robust disciplinary process and could expel members if a serious complaint was upheld.

However, to date she said "very few" members have been expelled and their names have never been made public.

The EUFA roadshow continues on to Palmerston North and Wellington this week while the start of its South Island tour has been postponed until March 2.

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