In The Circular Issue 7, Spring 2011, the Financial Ombudsmen Service (FOS) has published its approach to calculating loss in financial advice disputes (please click here to view).
Financial advice disputes are disputes including claims about financial planning, stockbroking, managed investments, securities and derivatives.
Losses claimed by applicants can include:
FOS can only award compensation for losses in accordance with its Terms of Reference. In disputes lodged on or after 1 January 2010, FOS may award up to $150,000 compensation per claim for direct financial loss and up to $3,000 for consequential financial loss.
From 1 January 2012, the compensation cap for direct financial loss will increase from $150,000 to $280,000. However, FOS may not award more than a total of $150,000 or $280,000 per claim for direct and consequential financial loss combined.
When considering a financial advice dispute, FOS will:
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ask the applicant to identify the amount of the loss claimed and to provide particulars of each item of loss that forms part of the overall loss claimed
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where the Financial Service Provider has breached a duty and/or contract (but has not engaged in misleading or deceptive conduct) - identify which items of loss are too remote by applying a “foreseeability” test.
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identify whether items of compensable loss are direct or consequential, and
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where the Financial Service Provider has engaged in misleading or deceptive conduct – assess whether the conduct materially contributed to each item of loss claimed.
For more information, please contact:
Emma Hodgman | Partner
T +61 2 8233 9650
F +61 2 8233 9555
E emma.hodgman@dibbsbarker.com
