AFCA Decision: Charter Financial Planning Limited Ordered to Compensate for Inappropriate SMSF Advice

AFCA Decision: Charter Financial Planning Limited Ordered to Compensate for Inappropriate SMSF Advice

The Australian Financial Complaints Authority (AFCA) has ruled against Charter Financial Planning Limited in Case 12-00-784801, finding that the firm provided inappropriate financial advice to a client, Mr V, regarding the establishment of a self-managed superannuation fund (SMSF) and investment in direct property.

Key Points of the AFCA Determination

• Inappropriate Advice: The advice given in 2013 by an authorised representative lacked diversification and increased Mr V’s already significant exposure to property. This breached section 945A of the Corporations Act 2001 (Cth), which requires financial advice to be appropriate to the client’s circumstances.
• Financial Loss: Mr V followed the advice, resulting in a highly concentrated property portfolio and increased risk. AFCA found that this strategy caused financial loss up to December 2015.
• Compensation Awarded: Charter Financial Planning Limited must pay $109,083.96 plus interest to Mr V’s SMSF or nominated superannuation account. This amount reflects the difference between Mr V’s actual position and where he would have been if he had remained in an APRA-regulated fund.
• Client Responsibility Post-2015: After declining a free review of his financial strategy in 2015, Mr V became responsible for any further losses.

Why This Matters

This AFCA decision highlights the importance of tailored, diversified financial advice and the obligations of financial advisers. It also underscores the need for clients to act on opportunities to mitigate losses when offered remediation.

If you received financial advice from a financial advisor to set up an SMSF and have concerns around the advice you received, we encourage you to contact Financial Dispute Legal to discuss your options and rights to recover compensation on 1300 433 533 or enquiry@fdlegal.com.au

‍