Financial Firm to Pay $200,000 after Inappropriate SMSF Advice, Says AFCA

A financial firm was held accountable and required to pay $200,000 in compensation for providing inappropriate advice regarding a Self-Managed Superannuation Fund (SMSF).

Complaint

The complainants are the corporate trustee and directors of a Self-Managed Superannuation Fund (SMSF). SPF was a corporate authorised representative of The Financiallink Group Pty Ltd between August 9th 2013 and November 13th 2018.

In 2014, a financial adviser employed by SPF and authorised under the financial firm provided personal financial advice to the complainants regarding the suitability of purchasing property through the SMSF. The complainants say this advice was inappropriate for their financial situation at the time and has caused loss to the SMSF and to them personally.

The financial firm said the complainants had already established the SMSF and decided to purchase property through it prior to obtaining advice. It says the advice provided was simply about the implementation of this strategy and there was no obligation to take any further actions. It has declined to pay compensation.

ASIC’s Findings

ASIC determined that the adviser and corporate authorised representatives had an obligation to examine whether the strategy to invest in property through the SMSF was in the best interests of their clients and to advise against continuing with the strategy in the event it was inappropriate.

ASIC determined that the advice received was inappropriate for their circumstances and that the financial firm should be held responsible for the conduct of the adviser and corporate authorised representatives. Therefore, the financial firm should place the complainants in the position they would have been in if it was not for inappropriate conduct.

Determination

This determination was in favour of the complainants. The financial firm was required to pay the SMSF compensation in the amount of $206,938.68, plus compound interest.

Getting Legal Help for Bad Financial Advice

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.

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