Speaking to Nest Egg, Mr Crane said many investors who lose money from investments chalk it up to the general risks of investing, when in fact they may be eligible for compensation.
“Advisers and financial institutions have strict requirements on the types of things they can tell you or advise you to do. For example, advisers are not supposed to provide you with advice that is not in your best interests, credit providers are not allowed to give you loans that you cannot afford, and neither are allowed to make misleading representations,” he said.
“But if they entered into those investments because of bad financial advice from an adviser, they may be able to seek compensation. Also, if an adviser fails to warn you against making an unsuitable investment, you may be able to claim against them.”
Mr Crane added that some investors find themselves in bad investments because they are not properly accounting for tax liabilities.
“They end up with a tax bill they were not expecting and then try and come up with ways to minimise their tax liability after the fact. This makes them desperate and susceptible to taking bad investment advice, which can put them in an even more precarious position,” he said.
“It is much better to speak to your accountant beforehand so that appropriate plans can be put in place.”
But in order to be successfully compensated, a claim must be made in a reasonable time frame.
“If you do not bring a claim in time, you can lose it,” Mr Crane said.
“So, make yourself aware of the obligations imposed on financial advisers and financial services so you can (a) hopefully avoid bad advice or financial services, and (b) understand when you should complain or seek legal help.”