Clearview Financial Advice To Pay $50,000 in SMSF Case
Clearview Financial Advice has been found responsible for providing inappropriate investment advice to an SMSF, resulting in a compensation award of $50,000.
Complaint
This complaint is brought by Mr and Mrs G both in their individual capacities and as directors of the corporate trustee of their Self-Managed Superannuation Fund (SMSF).
The complainants say that Mr P, an authorised representative of Clearview Financial Advice Pty Ltd, provided Mr and Mrs G with inappropriate investment advice relating to the establishment of the SMSF and its subsequent investment in real property utilising a Limited Recourse Borrowing Arrangement (LRBA).
As a result of this advice, the complainants say Mr P provided them with unnecessary, and therefore inappropriate, insurance advice. They say they are $346,681.25 worse off as a result of accepting Mr P’s advice and seeking this amount in compensation.
Clearview Financial Advice says Mr P’s advice was limited to providing assistance in rolling over superannuation monies from Mr and Mrs G’s pre-existing superannuation funds into the SMSF and providing advice on the SMSF’s investment strategy with those funds. As a result of the trustees’ investment decisions, the insurance recommendations were appropriate. It has denied liability and declined to pay any compensation.
Issues and key findings
What Financial Product Advice Is The Financial Firm Responsible For?
Clearview Financial Advice is responsible for the financial product advice provided to the complainants to establish the SMSF, roll over their pre-existing superannuation monies, and enter into an investment strategy involving a Managed Fund Portfolio and direct property holding through an LRBA.
Was The Advice Provided Appropriate For The Complainants?
No. The advice endorsing the SMSF establishment and property investment via an LRBA was inappropriate for Mr and Mrs G as it left them significantly overweight in property and did not consider alternative strategies which could have more effectively achieved Mr and Mrs G’s retirement goals.
Have The Complainants Suffered Compensable Loss As A Result?
Yes. It is clear the complainants have suffered the loss. Had appropriate advice been provided, the complainants would not have purchased the Balwyn property. However, Clearview Financial Advice is only liable for the direct loss their conduct caused. As a result, it is appropriate for any compensation award to be conditional on the sale of the property and the winding up of the SMSF.
Why Is The Outcome Fair?
The outcome is fair because it places the complainants in a position as close as can reasonably be achieved to that which they would have been in had they received appropriate advice.
Determination
This determination is in favour of the complainants. Clearview Financial Advice must pay the SMSF $51,750.
