Investment products: at every renewal, the adviser must reassess the risks

Between 2003 and 2005, on the recommendation of a first adviser, an investor subscribed to Aristophil contracts, investments backed by collections of old manuscripts.

From 2007, he changed wealth management adviser. On the new adviser’s advice, he extended the subscriptions.

In 2015, Aristophil was placed in compulsory liquidation. The investor sued the adviser for breach of his duty to inform.

The adviser argued that he had not advised investing, only extending or renewing. In his view, the duty to inform lies with whoever advises the subscription, not with the mere rollover, on the same terms, of contracts entered into on someone else’s advice.

The court of appeal accepted this reasoning.

The Court of Cassation overturned the decision.

An adviser must inform the investor of the essential characteristics of the investment, including the least favourable ones, and of the associated risks, both at subscription and at any renewal he advises (former Article 1147 of the Civil Code).

In practice: a renewal is not a formality. The professional who advises it must reassess the risks and inform the client, even if he was not involved in the original subscription.