Determination - 4 December 2014
Key issues: Financial advice | Financial adviser | Inappropriate advice | Geared investments | Self-managed superannuation fund | Tax treatment of compensation
Summary of Determination
- I find that the consumers’ complaint against the FSP has been made out; in particular:
- Ms W, an authorised representative of the FSP (the Representative), did not have a reasonable basis for the advice provided to the consumers regarding their geared investment portfolio;
- the Representative provided advice to the consumers to establish a self managed superannuation fund (SMSF), but did not have a reasonable basis for doing so;
- the Representative provided advice to the trustee of the SMSFregarding the investments of the SMSF, but did not have a reasonable basis for doing so; and
- as result of relying on this advice, both the consumers and theSMSF trustee have suffered loss.
- In order to compensate the consumers and the SMSF trustee for the loss they have suffered as a result of the Representative’s conduct, I order the FSP pay:
- the consumers the sum of $280,000; and
- the SMSF trustee the sum of $53,303.