Turks legal firm has highlighted the importance of advisers understanding the products they sell, looking back at a case where the NSW Supreme Court found in favour of a plaintiff given incorrect oral advice.
In the case last year, businessman Salvatore Coco took Westpac to court over advise he had received on a new Westpac product. According to Turks, an adviser told Coco Westpac guaranteed that at the conclusion of the five-year investment term, his capital investment would be returned and a profit would be paid.
“What [the adviser] told Coco was, albeit innocently, incorrect,” said a Turks spokesperson. Westpac offered no such guarantee. Two years after the investment, the GFC occurred and Coco was told that he would receive his capital investment back but no profit. Coco then sued Westpac for generally misleading and deceptive conduct.
The court took the view that oral representations trumped written documents, and accepted the evidence of Coco over the adviser.
It noted that it was open to the adviser to refer Coco to the Bank’s written material to answer any query that he had in relation to the product; however, he declined to do so and provided Coco with advice that was wrong, said Turks. The Court determined Coco’s measure of loss to be $2,701,238.
“It is a timely reminder to financial advisors,” said Turks. “If you are in the business of providing advice in relation to certain investments products, be sure to know exactly how they work and what they will deliver to your client.
“This decision demonstrates that lenders must ensure that its agents and employees are thoroughly trained and have a proper understanding of its products. Lenders are bound by the conduct of their employees and agents.”