Ausure To Pay $100,000 After SMSF Recommendation
Ausure has been found liable for providing inappropriate advice regarding an SMSF recommendation. The advice resulted in a capital loss for the complainants, who were misled about the affordability of the strategy.
Complaint
This complaint has been brought by Mr M and Ms M in their individual capacities and by the corporate trustee of Mr and Ms M’s Self-Managed Superannuation Fund (SMSF) of which they are the directors.
Around November 2018, Mr and Ms M were introduced to a property promoter, Mr G. Mr G met with them to discuss the prospect of acquiring property through an SMSF. Mr G provided them with a brochure for a 2-bedroom apartment at a new property development on the Sunshine Coast and advised he would refer them to Mr H, a financial planner, to “put it all together”.
Mr H was authorised through a corporate authorised representative of Ausure Pty Ltd. On 30 November 2017, Mr H met with Mr and Ms M and obtained information from them which enabled him to commence preparing financial advice relating to establishing the SMSF, its trustee, and a Limited Recourse Borrowing Arrangement (LRBA) so Mr and Ms M could use their superannuation savings to purchase the apartment recommended by Mr G.
The complainants say the advice provided by Mr H in the Statement of Advice (SOA) dated 25 January 2018 was inappropriate and not in their best interests. Due to affordability issues which should have been identified initially, the apartment has had to be sold at a capital loss and Mr and Ms M are left in a worse financial position than if they had simply left their superannuation in their original superannuation funds. The complainants also allege the trustee has paid for financial advice services that it has not received.
Ausure says the strategy was affordable and appropriate, but the complainants did not comply with it. It has declined liability for any loss.
Issues And Key Findings
Was the January 2018 Advice Appropriate for Mr and Ms M?
No. The advice provided was not appropriate for Mr and Ms M as it was unaffordable based on the reasonable objective assessment of the family’s expenses and cash flow.
Did the Trustee Pay for Services Which Were Not Received?
No. AFCA is satisfied the complainants received the contracted services as per the ongoing advice agreement.
Are the Complainants Entitled to Compensation?
Yes. The complainants have suffered direct losses as a result of the financial firm’s inappropriate advice. However, they have also contributed to their losses.
Why is the Outcome Fair?
The outcome is fair because the complainants were persuaded by Mr H that the strategy first suggested by Mr G was achievable. It was Mr H’s responsibility to reality test the complainants’ expectations and to advise against an unrealistic financial strategy. He failed to do so. However, Mr and Ms M’s decisions have contributed to the loss also.
Determination
This determination is in favour of the complainants. Within 28 days of the date the financial firm is informed of the complainants’ acceptance of this determination, it must pay $103,739.84 plus compound interest to the SMSF.
Getting Financial Help
Contact us if you’re questioning the advice you received from a financial advisor and are thinking about taking steps against them. We are committed to ensuring our clients receive the best possible advice and guidance on their situation, especially in financial matters. You can contact us online, call us at 1300 433 533 or email us at enquiry@fdlegal.com.au.
