Risky products

This is the latest in a series of court cases Westpac faced for misleading advice on structured products. In 2012, Westpac was forced to pay two investors $380,000, after the court found Westpac financial advisors misleadingly told them the GPS products were similar to a protected equity loan.

In 2014, Westpac also compensated a former media executive for failing to adequately explain the highly complex financial products known as MQ Gateway Trust.

On the Westpac website, GPS was marketed as having "a range of special features including ... 100% capital protection at maturity" but it did state GPS is suitable for wholesale investors rather than retail investors.

ASIC has warned in a report that for some retail products, labels such as "capital protected" and "capital guaranteed" can create a false perception that investors cannot lose their capital.

Timeline of alleged events

Westpac no longer sells these products.

The case comes after Westpac chief executive Brian Hartzer asked Labor to back off its campaign for a royal commission into banks.


Zero coupon bonds

He claims he took out a $2.15 million loan to invest $2 million in GPS in 2007 after the institutional bank's sales team said during a presentation GPS products would be protected by the "capital protection" allowing him to recoup all of his initial investment.

He also claims his colleagues told him afterwards he would be suitable for a $2 million investment in GPS.

Initially, the funds were actively managed but when the global financial crisis hit, Mr Daly's entire GPS investment rolled over to a passive asset portfolio made up of "zero coupon bonds", which did not deliver returns until they mature.

Mr Daly did not exit GPS until it matured in 2012 because of a $250,000 early break fee.

In 2008, the couple also took out a mortgage with Westpac for a $1.7 million four-bedroom family home, without realising the mortgage secured his loans on the GPS investment.

Two years later, Westpac allegedly demanded an immediate payment of $200,000 for the outstanding loan and told him if he didn't pay, Westpac could sell his family home.

Mr Daly wants Westpac to pay more than $800,000 in damages and wants to stop the bank from enforcing the mortgage, because arguably the couple were "vulnerable and at a special disadvantage".


He claims GPS was a highly risky and unpredictable financial product which did not suit his borrowing profile and his colleagues failed to advise him about the zero coupon bonds and the substantial early redemption fee.

He says even though he was a business financial planner, he didn't know about the risks of GPS because he wasn't allowed to give advice on structured financial products.

He now works as a private client adviser at wealth management firm Shadforth Financial Group. His bio states he was recognised for his technical expertise as a senior planner at Westpac.

misa.han@fairfaxmedia.com.au