The Financiallink Group to Pay $34,000 in SMSF Claim
The Financiallink Group has been found liable for providing inadequate financial advice, resulting in a compensation award of $34,000.
Complaint
The complainants have made this complaint in their personal capacities and as directors of their self-managed superannuation fund (SMSF). They received personal financial advice from their adviser, Mr M, on 27 February 2017 to establish the SMSF as a vehicle to make a geared investment in an off-the-plan residential property. They accepted the advice and paid a $42,000 deposit on the property.
In April 2017, Mr M provided additional personal advice to invest $177,000 from the SMSF, which was intended for property settlement, into two Investport Income Opportunities Fund (IIOF) investments that have since been frozen. This advice was accepted and implemented. However, the advice is not a subject of this complaint as the complainants are part of a class action in relation to those investments. The SMSF’s inability to redeem the IIOF investments meant the SMSF was at risk of losing the $42,000 deposit paid for the property.
This complaint is about the advice the complainants received from Mr M in August 2018 to borrow funds using their home as security to on-lend to the SMSF so it could complete the purchase of the property and prevent the loss of the $42,000 deposit. In January 2021, the Australian Taxation Office (ATO) told the complainants the loan arrangement was in breach of its guidelines and they sold the property in October 2021 to remedy the breach. They seek compensation for their losses.
The case manager has already provided a recommendation on these issues. The recommendation was in favour of the complainants and a copy of it is attached.
In addition to the ongoing class action lawsuit, Financialink Group has been engaged in at least three other AFCA cases where they were found liable to pay $260,000, $200,000, and $500,000 to the respective complainants.
Issues and Key Findings
Were The Findings In The Recommendation Correct?
The findings in the recommendation were correct and are adopted in this determination. AFCA has considered further submissions provided after the recommendation. Save for the compensation amount and the interest award, they are satisfied the recommendations’ findings are correct.
Why Is The Outcome Fair?
The $34,302 compensation award is fair because it places the complainant’s SMSF in the financial position they would have been in had they received appropriate advice. It is also fair to award interest on the award to maintain its true value.
Determination
This determination is in favour of the complainants. If they accept the determination, the financial firm must, within 28 days of being notified of the acceptance, pay $34,302.37 compensation to the complainants’ SMSF with interest.
Legal Help After Poor Financial Advice
If you suspect that you have been provided with poor financial advice and wish to discuss your situation with our team of legal experts, please do not hesitate to get in touch with us. Our top priority is to ensure that our clients receive the highest quality advice and support, particularly in financial matters. You can reach us online, call us at 1300 433 533, or send an email to enquiry@fdlegal.com.au.
