Charter Financial Planning and GWM Adviser Services to Pay for Clients’ Losses

The Complaint

Mr and Mrs D (the complainants) are the directors of a corporate trustee and beneficiaries of a self-managed superannuation fund (SMSF). They have brought two complaints, one against Charter Financial Planning Limited and the other against GWM Adviser Services Ltd, in their personal capacity and as directors of the corporate trustee of the SMSF.

The complainants are concerned they received inappropriate advice from Mr S between May 2011 and 15 May 2012 while he was a representative of Charter Financial Planning and from 16 May 2012 while he was a representative of GWM Adviser Services. The disputed advice involves setting up an SMSF as a vehicle to buy investment properties in Cliftleigh, NSW and Taringa, Qld.

The strategy did not perform as expected, and the complainants seek compensation for the losses suffered by the SMSF.

Issues and Key Findings

AFCA determined that Mr S had an obligation to review the suitability of the SMSF and the strategy to buy an investment property, as he signed the financial advice certificate in relation to the loan for the Cliftleigh property.

AFCA also found that the advice provided by Mr S in May 2011 to establish an SMSF as a vehicle to purchase a residential investment property was inappropriate as it did not meet the critical aspects of the complainants’ objectives, financial situation, and needs.

However, the financial firms are not responsible for any losses arising from the SMSF’s purchase of the Taringa property because:

• The complainants did not ask for advice about buying the Taringa property
• The SMSF purchased the Taringa property without advice
• Mr S did not provide advice about the Taringa property.

The panel AFCA determined this a fair outcome:

• the complainants were entitled to trust and relied on the advice provided by Mr S
• the outcome fairly reflects that Mr S’s conduct, while he was a representative of Charter Financial Planning set in motion the circumstances that led to the SMSF’s loss and the losses, continued while Mr S was a representative of GWM Adviser Services

AFCA’s Determination

Mr S’s advice to establish an SMSF and purchase an investment property was a substantial cause of the SMSF’s losses. As a result, the financial firms are required to compensate the SMSF for its global losses in relation to the July 2011 strategy.

Getting Legal Help for Bad Financial Advice

Contact us if you’re questioning the advice you received from a financial advisor and consider 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.