Future Assist Financial Services To Pay $100,000, Says AFCA
Future Assist Financial Services faces a penalty of $100,000 as AFCA deems their advice regarding an SMSF to be inappropriate.
Complaint
The complainants, Mr and Mrs P, bring this complaint in their personal capacity and as directors of the corporate trustee for their self-managed superannuation fund (SMSF). Mr and Mrs P sought advice from the financial firm in late 2015.
In early 2016, the Future Assist Financial Services Group Pty Ltd advised them to:
- establish an SMSF and rollover existing superannuation funds to the SMSF
- borrow funds within the SMSF to purchase a residential investment property.
They say the advice was inappropriate because it relied on income that Mr P no longer had, given a recent redundancy and ignored their key objective to reduce debt.
The financial firm says the complainants wanted to build wealth through property investment and had an aggressive risk profile. It says the recommended strategy was appropriate for these reasons.
Issues and Key Findings
Was The 2016 Advice Appropriate And In The Complainants’ Best Interests?
No. The advice was ill-suited to the complainants’ personal circumstances. The complainants were approaching retirement, Mr P (who was the primary earner) had just received a redundancy payment and was self-employed, their existing assets were already concentrated in residential property and their key objective was to reduce debt. The strategy was unlikely to meet its key objective and relied on uncertain cash flow. Their secondary objective to retire at age 65 on a combined annual income of $150,000 was unrealistic, but the advice failed to address this. The strategy lacked diversification and carried a significant risk of financial loss.
Why Is The Outcome Fair?
The outcome is fair because it recognises the financial firm’s failure to act in the complainants’ best interests, and as closely as possible, places the complainants in the position they would have been in if they had received appropriate advice.
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 SMSF 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 SMSF property and provide evidence of this to the financial firm.
The financial firm must pay:
- $100,000 compensation
- any remaining loss calculated post-sale
- any adjusted figure
- costs associated with marketing and sale of the property
- interest
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.
