Widow wants repayment of Bridgecorp investment

An Oamaru widow is asking her Auckland-based financial planner to pay her back the $20,000 he invested for her in finance company Bridgecorp in September last year.

She is also seeking from him $360 interest which Bridgecorp failed to pay at the end of June, just before it was placed in receivership.

She is one of 18,000 mum-and-dad investors who put $500 million with the finance company, the assets of which have been frozen after it was placed in receivership early this month.

She said she gave the financial planner in Auckland authority to invest and manage a portfolio of investments worth $179,000 of which the Bridgecorp investment was one.

She had been the client of another planner in the same firm who had moved out of the industry and the firm had passed her business to this planner.

She said the financial planner said Bridgecorp was a very well run company when he told her he was investing $20,000 in a three-year debenture with a 9.25 per cent interest rate.

She said from what she had read in the past month many in the finance industry knew Bridgecorp was a high risk investment. She had confided in few people about the investment because she felt ashamed, although she did not know why.

She also had $9000 invested in finance company Provincial Finance, on the advice of the earlier financial planner, placed in receivership last June owing 14,000 investors $300m.

Receivers have paid Provincial Finance debenture holders 57.5c in the dollar and estimate the investors will eventually get 90c to 95c in the dollar back.

She said the financial planning firm had acknowledged her request for the $20,000 but had said only that it would keep her informed of what was happening with Bridgecorp.

The receivers of Bridgecorp are expected to update investors in the coming week.

She does not believe the planner had acted in her best interests, one of the obligations under her contract with him, in placing her investment in Bridgecorp when she was a "conservative" investor.

She questioned why he did not know Bridgecorp was high risk if others did.

For the "monitoring" of her portfolio and administration services she said she paid the financial planning firm $2121 last year and so far this year about $800.

What redress an investor has when advised to make an investment by a financial adviser and the investment turns sour is not straightforward.

Christchurch lawyer Helen Smith, an associate at Duncan Cotterill, said these were difficult issues and much depended on the contract between planner and client.

Matters such as what or whether the financial planner made investigations into the investment, how the planner presented that to the client, whether the adviser or client made the ultimate investment decision were central.

"It does just depend on the facts of each case," Smith said.

It came down to issues of whether there was breach of contract and/or negligence.

Another matter was what information the financial planner was receiving from Bridgecorp and what form did the adviser pass it on to the client.

"Did they pass it on in the form it was given to them," Smith said.

"It's not just a simple case of you invested my money for me and you have to pay me for what I've suffered and I didn't gain," Smith said.

It was really an assessment of what was the contract between the parties and if the planner gave the appropriate advice.

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