CGU Insurance won round one of the legal battle on who should foot the bill for compensation paid to investors affected by crook advisers.

Justice Peter Heerey found in the Federal Court that CGU’s professional indemnity policies did not cover the $3,242,668 that AMP Financial Planners paid in settlements.

After further submissions from both sides the judge will rule on whether CGU should cover another $3 million of claims for actual and potential losses at a later date.

AMP Financial Planners was seeking to recover damages from CGU, less the excess of $6500 per claim. The losses stem from investment advice provided by two AMP agents, Ashok Pal and Anthony Howarth, who invested $3.4 million of clients’ money in Hibiscus Spas, of which Mr Pal was a director.