Axis Investment Centre To Pay $195,000 For Inappropriate SMSF Advice

Complaint

The complainants, Mr J and Ms M bring this complaint in their personal capacity and as

directors of the corporate trustee of their self-managed superannuation fund (SMSF).

The complainants say that Axis Investment Centre Pty Ltd provided inappropriate financial advice in 2013, recommending them to establish an SMSF in order to facilitate their objective of purchasing an investment property (the Mackay property). They say the SMSF advice was inappropriate because of:

• a low starting balance
• unacceptable level of borrowing
• inadequate diversification of assets
• investing in an illiquid asset.

The financial firm says the advice was appropriate to the complainants’ personal circumstances and therefore it is not responsible for the alleged loss.

The case manager has already provided a recommendation on these issues, in favour of the complainants.

Key Findings

AFCA determined the outcome is fair because the advisor breached his obligations to the complainants. It is fair that they are compensated for the direct losses flowing from that breach.

They also determined that the method of calculating and paying compensation is fair because it allows the reasonably ascertainable loss to be paid upfront and adjustment post-sale also gives the parties certainty that the complainants are neither over nor under-compensated.

Determination

This determination is in favour of the complainants and they have 30 days to accept it.

If they accept the determination the complainants must:

• market and sell the Mackay property in an arm’s length transaction within 6 months of the financial firm’s payment of upfront compensation
• apply upfront compensation to the outstanding loan against the Mackay property and provide evidence of this to the financial firm.

The financial firm must:

• pay $195,305.07 compensation (the upfront compensation);
• pay any remaining loss calculated post-sale based on the actual price;
• pay any adjusted figures;
• pay costs associated with marketing and sale of the property plus interest;

If the calculation indicates that the complainants have suffered a loss of less than $195,305.07, the difference must be repaid to the financial firm with interest at CPI.

The financial firm is not required to take any action if the complainants do not accept the determination and agree to market and sell the Mackay property as part of that acceptance.

Legal Help After Bad Financial Advice

If you believe you’ve received bad financial advice and would like to discuss your experience with us, reach out to our expert legal team. 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.