Standard & Poor’s (S&P), ABN Amro and investment manager Local Government Financial Services (LGFS) have lost an appeal in the Federal Court over claims they misled investors before the global financial crisis.

A dozen Australian councils sued after suffering $25 million losses on financial products arranged by Dutch bank ABN Amro and given AAA ratings by S&P. LGFS sold the products and claimed they had less than a 1% chance of defaulting.

A 2012 ruling found the businesses proportionately liable, but the latest hearing finds them 100% liable.

S&P, which says it is disappointed with the court’s decision, faces legal action over ratings in other countries.

Amanda Banton, a partner with law firm Piper Alderman, which represented the councils, says the court has made a “landmark decision that changes the legal landscape with regard to apportionable claims for misleading and deceptive conduct. The significance of this judgement cannot be overestimated.”