Interprac Financial Planning to Pay $450,000 to SMSF

AFCA has ordered Interprac Financial Planning Pty Ltd to pay $450,000+ to a Self Managed Super Fund after inappropriate advice.

This order is another in a series of payouts for SMSFs, including a $91,000 case from Infocus Securities, and two cases from the Financiallink Group, one for $185,000 and another for $200,000. ASIC and the ATO have also raised concerns about SMSF.  

The Complaint

The complainant is Company R, the corporate trustee of a Self-Managed Superannuation Fund (SMSF). This complaint was brought on Company R’s behalf by Mr RL and Dr L as its directors, collectively known as the “complainant”.

In October 2013, one of two properties owned by the SMSF was sold. Mr SL, an authorised

representative of the financial firm provided a Statement of Advice (SOA) dated 9 December 2013 recommending the SMSF should invest the sale proceeds into an investment portfolio.

Mr RL and Dr L say it was not until early 2020 that they sought advice from a different

financial adviser, which suggested Mr SL had:

• been negligent through failing to follow the agreed “balanced‟ investment strategy;
• given inappropriate and incorrect financial advice;
• misrepresented the value of the SMSF assets and the performance of the SMSF investments; and
• exposed the SMSF funds to high-risk investments that were inappropriate for its risk profile.

Mr RL and Dr L say their new adviser informed them Mr SL “had managed to fudge both

internal and external reports to everyone, including clients and auditors, to make portfolios look better than they were”.

The complainant says that but for the advice from Mr SL, the SMSF would have invested the sale proceeds into the SMSF’s then APRA-regulated superannuation account (Fund 1). The SMSF also had another APRA-regulated superannuation account (Fund 2).

The financial firm says that the advice was appropriate, particularly given the SMSF was a

wholesale investor within the terms of the Corporations Act 2001 (the Act).

Issues and Key Findings

AFCA determined that the complaint should not be excluded because the SMSF was a wholesale client.

They also found that the advice provided in December 2013 was inappropriate because Mr SL did not act in the best interests of the complainant.

Finally, they found that the breach by the financial firm caused the loss, as but for the inappropriate advice, the complainant would have invested in line with its risk profile and suffered direct loss as a result of the breach.

The Determination

This determination was in favour of the complainant. Within 28 days of the complainant accepting the determination, the financial firm must pay:  

• $449,581.54 to the SMSF;  
• $5,000 to Mr RL and Dr L; and  
• compound interest on the amount payable to the SMSF calculated at an annual rate

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.