Investors in stricken Provincial Finance are planning legal action against investment advisers who recommended the company's debenture stock, allegedly when there were already signs it was in difficulties.
Christchurch lawyer Grant Cameron yesterday confirmed he was having preliminary discussions with some Provincial investors.
"There may well be grounds to bringan action against some financial advisers. We are starting to go through some of the factual positions with individuals. There does seem potential there for recovery for some investors."
Provincial investors have been airing their grievances on a website - Provincial Finance survivors - which was set up on Sunday by Christchurch man Trevor Knopp.
Many of the mostly anonymous posts on the website outline concerns about the advice received from financial planners and investment advisers in recent months.
"Provincial's problems have been common knowledge to many of us for many, many months. It is bewildering why financial planners continued to recommend Provincial as a suitable and safe investment," said one.
"From reading the many other posts on this board it is obvious that there is a lot of poor/incompetent advice coming from supposedly professional financial planners/investment advisers," said another.
Cameron said the question of whether advisers continued to recommend Provincial knowing it was in trouble, "may be one of the grounds" on which investors could take action.
Westpac Bank, which withdrew credit facilities to Provincial, was unwilling to comment, citing client confidentiality and Provincial too did not return calls yesterday.
Ratings downgrade another blow
Provincial Finance took another knock yesterday with a ratings downgrade of its majority-owned insurer, Tasman Pacific Insurance.
Insurance rating agency AM Best said it had downgraded Tasman's financial strength rating to B- (fair) from B+ (very good).
Provincial has a 77 per cent interest in Tasman.
AM Best said a significant portion of Tasman's business was generated through Provincial and recent developments would severely affect Tasman's financial performance.
Its rating remained under review, with negative implications.
On Friday, the receivers said they were reviewing Provincial's investment in Tasman and obtaining an independent valuation of the insurer.
"However it seems likely that there will be a reduction in its book value."
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