AFCA Orders Gordon Home Loans to Pay $95,000 In SMSF Case

Complaint

This complaint is brought by the complainants, Mrs A and Mr I, in their personal capacities and in their capacities as trustees of their Self-Managed Superannuation Fund (SMSF). In

In October 2017, the complainants were contacted by Company GW through an unsolicited phone call. As a result of this call, the complainants were introduced to Mr J, a representative

of Company GW, a related entity of Gordon Home Loans Pty Ltd.

The complainants say Mr J was acting as a representative of Gordon Home Loans Pty Ltd when he advised them to establish their SMSF and have the SMSF invest in direct property. They say

he did not provide appropriate financial advice to them and the strategy was unsustainable given their personal circumstances. As a result of Mr J’s conduct, the complainants say they

have suffered loss and seek compensation.

Gordon Home Loans denies that it, or any of its authorised representatives provided financial advice to the complainants. It says it only provided general advice within the confines of its

Australian Credit Licence and says Company GW is a licensed real estate agency that only provided real estate “investment opportunities‟ to its clients.

Gordon Home Loans says the recommendation to establish an SMSF was provided by Company S, an unrelated third-party authorised representative of a different financial firm. It says the complainants, and/or Company S, were responsible for carrying out relevant due diligence to determine if the SMSF-property strategy was appropriate for the complainants.

Issues and Key Findings

AFCA determined that Gordon Home Loans is responsible for its own conduct and that of its representative, Company GW.

Gordon Home Loans and Company GW provided services to the complainants which were not covered by their respective authorisations. The financial firm’s representatives were reckless about checking the ability of Company S to provide the services the complainants were being referred for. The financial firm misled the complainants into believing Company S would be able to assist them.

AFCA believes that Gordon Home Loans bears the majority of the responsibility for the complainants’ losses, but not all of it. However, the complainants’ claim against Company S has already been resolved.

The outcome is fair as Gordon Home Loans should have supervised its representatives properly to ensure all activities were being carried out in accordance with its Australian Credit License

(ACL). Had it done so, it would have understood the need for its clients to obtain personal financial advice from a qualified professional.

The conduct of the representatives denied the complainants the opportunity to obtain appropriate advice which would have identified the strategy of investing in direct property through an SMSF was unsustainable for the complainants. The loss has therefore been directly caused by the conduct of Gordon Home Loans’ representatives.

Determination

This determination is in favour of the complainants.

Within 28 days of the date the complainants accept this determination, Gordon Home Loans is required to pay compensation to the complainants’ nominated superannuation fund in the amount of $95,417.42, plus compound interest. In addition, they must also pay the complainants $2,000 personally for non-financial losses.

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