In another story from the other side of the world, we get a Kiwi perspective on the Aussie financial services industry. In an article posted on nzherald.co.nz, David Chaplin writes on the subject of the compensation arrangements that exist for clients who have suffered losses as a result of poor advice given by their financial advisers.
And one of the points he makes is that professional indemnity insurance has shown itself to be somewhat lacking in its effectiveness from the client’s point of view. In support of his argument, he cites the now collapsed advisory firm, Vestar, against which more than 150 investors are taking legal action. The problem is that their case probably won’t be heard until next year. So, irrespective of Vestar’s professional indemnity insurance status, the investors are not about to receive compensation any time soon.
The solution? Well, according to Chaplin, the Australian authorities are looking at reforming the professional indemnity position and/or creating an industry-financed compensation fund. And he also thinks that New Zealand’s regulators will be keeping a close eye on developments.
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