VIC Sue Fake Financial Advisor for Bad Advice?

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Terry Ho

4 August 2014
X is a 35 year old accounts clerk who is a keen small-time investor on the stock market. As he is a good golfer, he is sometimes invited to play in amateur tournaments at an exclusive golf course. Last month X was paired with myself, an Asian businessman who had recently arrived in Australia. In an attempt to gain consulting work, X strongly implied that he was a successful financial advisor.

During the game, X urged me to invest in a small high-tech company which he said he had researched and was going “to boom”. X added, “Like they say in the ads, all care taken but no responsibility accepted”. I followed X's advice and lost $10,000 because the company was badly managed. Am I able to recover my losses from X who made himself out to be a financial advisor?

John R

Well-Known Member
14 April 2014
Hi Terry,
As an analogy, if we met and you gave me a "certainty" for this weekend's horse racing that I bet on, but lost, would you expect me to approach you for compensation? I assume that your answer would be "no" (or something less polite).
To my knowledge, a similar outcome would apply to your situation unless:
  1. The accounts clerk was actually a financial advisor, accountant, etc. and you had a formal client-advisor relationship with them and could demonstrate that their advice was negligent; or
  2. The accounts clerk misled or deceived you because they had an undisclosed vested interest in you investing in the business (e.g. were receiving an undisclosed commission).
Hope this helps.