Financial Planning

Time Limits for Making a Claim Against a Financial Advisor

A financial advisor is a qualified professional that can help you best manage your finances and achieve your financial goals. While financial advisers are legally required to act in the best interests of their clients, this regrettably does not always occur in practice. As victims of negligent financial advice often suffer devastating financial losses, there are financial negligence claims available to compensate victims for these losses. If you have received negligent financial advice, read on to find out more about the time limits for making a claim against a financial advisor, and consequently how to ensure your best chances at receiving financial planning compensation.

What is a financial negligence claim?

A financial negligence claim (also referred to as a financial planning compensation claim) is a means for those who have suffered a loss as a result of wrong, misleading or negligent financial advice to receive compensation, by making a claim against a financial advisor.

However, it is important to note that financial advisers are not responsible for every bad investment outcome. Some investments may go up and down in value simply as the result of market fluctuations, rather than negligent advice, and financial advisers usually cannot be held accountable for such fluctuations.

What are some examples of financial negligence?

Some examples of negligence from financial advisers may include:

  • Failure to obtain sufficient information about your relevant personal circumstances, financial situation, financial objectives, financial needs and risk tolerance
  • Recommending financial products that, after consideration of your personal circumstances, are risky or unsuitable
  • Recommending financial products for which they receive a bigger commission for, despite it being too risky or unsuitable for your circumstances
  • Recommending a substantial investment in one product, rather than a balanced and diversified strategy
  • Failure to advise you on all the risks associated with a strategy
  • Failure to advise you on alternative investment strategies
  • Failure to consider how a strategy may impact your retirement, particularly for older investors


What time limits apply to a financial negligence claim?

There is generally a statute of limitations of six years on financial negligence claims. This means that you have a six year time limit beginning from when you first engaged the financial adviser or when you first suffered your financial loss, to bring forward a claim. Once the six year period has elapsed, claims can usually no longer be lodged.

Can the time limits of financial negligence claims be extended?

If a claim is not lodged within the specified time period of six years, there is the possibility of an extension being granted by the courts. However, only where special circumstances prevail will an extension be granted. When deciding whether an extension will be allowed, the courts will consider the following:

  • The length of the delay in bringing forth a claim
  • The reasons for the delay in bringing forth a claim
  • The nature and extent of the financial loss

It is solely at the court’s discretion as to whether an extension should be granted. Victims of negligent financial advice should not rely upon obtaining an extension as they are not easily given, and should aim to make their claims well within the time limits. To ensure you are within have not lost the opportunity to take legal action and receive compensation due to any time limits, you should seek legal advice as soon as possible.

If my financial negligence claim is successful, how much compensation will I receive?

If you are successful in your financial negligence claim, you will be compensated to the point which will return you to your financial position before the negligent actions of your financial adviser occurred. This may also include any lost profits or expenses incurred in trying to resolve the negligence.

Is there an alternative to making a financial negligence claim?

For claims with a monetary limit of less than $200,000, it may be possible to resolve your dispute via the Financial Ombudsman Service (FOS). However, for claims greater than this monetary limit, it is best to proceed with a financial negligence claim. As the calculations of compensation may be difficult to assess, and requires expert estimation, expert legal advice should be sought to determine the most appropriate avenue to take.


For more information about financial negligence claims, contact Schreuder Partners today!

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