Tan Kin Lian's Blog: South China Morning Post: 2003 case sets precedent for action against financial advisers

Wednesday, October 08, 2008

South China Morning Post: 2003 case sets precedent for action against financial advisers

South China Morning Post (Hong Kong) - October 7, 2008
Financial advisers can be held liable for negligent investment recommendations to clients, a local court ruling in 2003 has established.

In the Field vs Barber Asia Limited (HCA7119/2000) case, plaintiff Susan Field was awarded compensation of GBP219,890 (HK$2.84 million) plus interest and costs that she had lost as a result of changing an investment portfolio on the recommendation of the defendant.

Ms Field had asked for a conservative investment portfolio. It initially made a British sterling-dominated portfolio for her, but later advised her to gear up her portfolio with a Japanese yen loan. A subsequent appreciation of the yen forced her to provide additional cash for the loan, eventually losing the whole investment.

The Court of First Instance ruled that the financial adviser was expected to warn Ms Field of the risks. The ruling was upheld by the Court of Appeal when the defendant appealed.

Citing this case yesterday, Civic Party leader Audrey Eu Yuet-mee said minibond holders were in an even stronger position than Ms Field to claim compensation, as they had signed contracts with the distributors. She has asked the Consumer Council to refer to the case and consider using its consumer legal action fund to help holders claim compensation.

Ms Eu said individual investors might not be willing to launch costly lawsuits.

Fanny W.Y. Fung

6 comments:

Anonymous said...: This is exactly what Section 27 of the FAA is supposed to address the errors and inappropriateness of recommendation by insurance agents and RMs.
But MAS is so reluctant or even inaction to enforce this law. Don't know why.Wonder who is MAS protecting?
Malpractices are so rampant in the financial industry among insurance agents and banks consultants.
MAS should behead some agents and RMs and hang them in Orchard Road and Shenton Way to warn these greeedy salespeople.
Study your KYC and use it to sue the banks and insurance companies for the malpractices of their intermediaries.

Justice is nearer now.; October 08, 2008 3:24 PM
Anonymous said...: MAS has responded to my complaint. They have forwarded my complaint to FI. What can I expect next?

Should I lodge complain to Fidrec at the same time?; October 08, 2008 3:27 PM
Anonymous said...: It would be great if CASE would use their legal funds to help to sue the distributors.; October 08, 2008 3:52 PM
zhummmeng said...: `The market does not exist to serve the interests of financial intermediaries. It exists to serve the public.” - Joseph Yam, CEO HKMA
.
“You need regulators to take a view. You need a health warning.” - Joseph Yam

MAS should emulate the attitude of CEO of HKMA and don't say we don't want to OVER REGULATE. This is a refrain the investors are tired of hearing.
There is now a disquiet whose interest is MAS protecting.
MAS is sending the wrong message to the insurance agents and the RMS, the banks and the insurance companies.
The insurance agents and the bank RMS think the market exists to make them rich, to get the 5 Cs at the expense of the investors who are condemned to live in HDB squatters.
MAS must act NOW and invoke Section 27 of the FAA to haul up these wrong doers.There are plenty of these wrong doers from the insurance companies to the banks and other financial institutions. Throw a stone blind folded and at random and you are guaranteed to hit one. There is no better time to come down hard on these greedy and unscrupulous agents, consultants and salesmen. It is agents and RMs cleansing time.
To borrow a shakespearean line,this is the right time "to purge the air of pestilence" and there is plenty of it in our air now and before investors and the man in the street are further afflicted with this disease of misrepresentation and miss-selling and other unethical practices.; October 08, 2008 5:26 PM
Anonymous said...: Mr Fuld (Lehman CEO) got millions while investors lost all their hard-earned monies. He was asked by the Chairman of The House Oversight and Government Reform Committee, Mr Waxman, "Is that fair?

To prevent a repeat of this fiasco, US will have to take the "more regulation" route.

In Singapore, many old aunties and old uncles had lost their life-savings because unsuitable products were pushed to them. Let's ask the Financial Institutions : Is that fair?

If not, then like US, Singapore will have to take the "more regulation" route.; October 08, 2008 8:55 PM
Anonymous said...: Precisely, whatever happened was because of under regulation.
The structured products were under a category which was under regulated and so is Section 27 of the FAA which has not been vigorously applied and enforced.
You can see the current debacle is
due to the products and the sellers.
Rotten products miss-sold and misrepresented by unqualified consultants.; October 09, 2008 9:53 AM