Orion Capital Partners to Pay $728,000, Says AFCA
AFCA has ruled in favor of the complainants against Orion Capital Partners, citing inappropriate advice regarding Deferred Purchase Agreements (DPAs).
Complaint
In late 2016, Mr E and Ms B became clients of Orion Capital Partners Pty Ltd. On 14 November 2016, they established a self-managed superannuation fund (SMSF) and became directors (and members) of its corporate trustee. The SMSF also became a client of the financial firm.
The financial firm wrote to Mr E & Ms B on 28 November 2016 providing a “flexible financial strategy to meet (their) business, family and wealth creation objectives‟. This strategy included advice to invest in Deferred Purchase Agreements (DPAs).
Between January 2017 and June 2019, the SMSF purchased one DPA and Mr E and Ms B jointly purchased seven in their individual capacities.
The complainants say the financial strategy, and specifically the nature of DPAs, was misrepresented to them. They say they relied on the representations made by the financial firm to their detriment and seek compensation for the direct financial loss suffered as a result.
The financial firm says the complainants were wholesale clients and therefore it was not required to provide them with appropriate personal financial advice. They also say AFCA cannot handle complaints brought by wholesale clients.
Issues and key findings
Were The Complainants Properly Classified As Wholesale Investors?
No, the financial firm provided incorrect income and asset information to the accountant and therefore the complainants were retail clients.
Does AFCA have the jurisdiction to handle the complaint?
Yes. AFCA is properly possessed of the complaint.
Did The Financial Firm Provide Appropriate Advice?
No. The financial firm has not demonstrated it acted in the best interests of the complainants and therefore cannot be said to have provided appropriate advice regarding the DPA investments.
Why Is The Outcome Fair?
The complainants have established they should have received personal advice appropriate to their status as retail clients. Accordingly, it is fair that the complainants should be placed as near as possible to the position they would have been in but for the financial firm’s inappropriate advice to them.
Determination
This determination is in favour of the complainants. Within 28 days of the date the financial firm is advised the complainants have accepted this determination, the financial firm is required to pay:
- to Mr E and Ms B, jointly in their individual capacities, $554,332.23
- to the SMSF, $174,584.18
- plus 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.
