HAWKE'S Bay investors were stung more than most by finance company collapses, with losses in the region topping $40 million, investors' advocate Chris Lee said yesterday.
The Wellington-based adviser was speaking at a public meeting in Napier yesterday attended by more than 40 people. The meeting was organised by the Exposing Unacceptable Financial Activities Society, a voluntary group seeking accountability on behalf of mum and dad investors.
Mr Lee said he had received 103 emails from concerned residents between Waipukurau and Napier who he said had received poor financial advice.
"That's a disproportionate level of complaints and losses out of [First Step, Bridge Corp, Capital + Merchant and ING's Income Fund] compared with the rest of the country," Mr Lee said.
He estimated $40 million had been lost by Hawke's Bay investors into ING's Income Fund, an income derivatives fund; First Step (in liquidation), a propriety product of finance company structure offered by Money Managers; Bridge Corp (in receivership) and Capital + Merchant Finance (in receivership).
Napier resident Helen Cannon who attended the meeting was shocked to learn New Zealand was the last country in the OECD not requiring regulation of financial advisers. "That's an appalling situation."
She learned about the process of winning compensation and how a group of investors could achieve this. "But that isn't as easy as you think."
Mr Lee spoke about what investors were entitled to expect from a financial adviser and what constituted action or advice and the rights to compensation when advice was wrong.
"[An investor is] entitled to expect knowledgeable and genuine understanding of what they are getting," he said.
"When you get losses with fixed interest products or get an adviser who has no knowledge and is just a conduit for a company to sell its products - that is actionable."
He cited one Hawke's Bay adviser who put large amounts of investors' money into Bridge Corp. "There is no convention in the industry to put up to 80 per cent of people's money into one finance company. That breaks the rules of diversification, which every trained adviser understands."
Mr Lee said settlements had been made by advisers who had reimbursed investors rather than be disgraced. "If they were in Australia or the US they would probably go to jail."