Financial adviser's indemnity should give comfort, not spectre of litigation
Your adviser's professional indemnity insurance could land you before a lawyer instead of compensating you
As consumers, we are supposed be comforted by the fact that financial advisers have professional indemnity insurance. Most of us expect that if our adviser messes up, the indemnity insurance will make good. But property syndication cases have revealed that not only should some advisers never have been giving advice, but that your adviser's professional indemnity insurance could land you before a lawyer instead of compensating you. A recent Supreme Court of Appeal case illustrates this. Centriq provided professional indemnity insurance to financial advisers who were members of the Financial Intermediaries Association of Southern Africa at a time when a number of association members were selling property syndications to investors - including some that crashed spectacularly. But when a widow who invested in the failed Zambezi property syndication promoted by Sharemax asked to be compensated for her broker's bad advice, the insurer took the case to court instead of paying up. Now, some ...
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