Lisa Ho designs on the catwalk at Myer
Fashion designer Lisa Ho has settled a court case with a former friend who had previously been banned from being a financial adviser, after she claims she lost $850,000 she invested with him.
The settlement comes as reforms to the financial planning industry, aimed at saving investors from receiving dodgy financial advice, continue to be delayed by the Federal Parliament.
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Ho had invested $850,000 with Hamish McLaren, also known as Hamish Watson, through her personal superannuation fund in 2011, after he allegedly told Ho she would receive an 18% return on her investment, according to Fairfax. Ho claims she saw no return on the outlay 18 months after making the investment.
In the Federal Court in Sydney, Ho alleged McLaren had engaged in misleading and deceptive conduct by falsely suggesting he had skills and expertise in financial investment and would make a significant return on the money.
The Australian Securities and Investments Commission had in fact banned McLaren from being a financial adviser for three years in 2002, when the watchdog alleged he misused funds to buy a Ferrari, according to a previous Fairfax report.
While McLaren had fought the case up until yesterday, he halted proceedings Wednesday morning to negotiate a settlement with Ho. He agreed to pay her $650,000, roughly the amount of her investment that she said he hadn’t returned, including legal costs and interest on the debt.
Ho’s company folded in 2013, with a debt of around $11 million. She was forced to close stores, leaving 100 people out of a job, after she failed to sell the business. She now stocks her collections exclusively with Myer.
Mark Rantall, chief executive of the Financial Planning Association of Australia, told SmartCompany business owners are driven by entrepreneurial spirit, but should not risk substantial amounts of money on investments that seem “too good to be true”.
“In my experience, if something seems too good to be true, it probably is,” says Rantall. “That’s when people start to lose significant amounts of money.”
Rantall says business owners should seek professional and quality advice from a qualified financial planner, who gives appropriate advice based on their client’s best interests.
He also recommends small business owners should invest in assets outside of their business and diversify their investment portfolio to safeguard themselves.
SmartCompany attempted to contact Ho, but did not receive a response prior to publication.