Landmark AFCA Determination: Financial Dispute Legal helps investor win first AFCA Complaint against MWL Financial Services Pty Ltd (in Liquidation)
Financial Dispute Legal (FD Legal) has won the first determination by the Australian Financial Complaints Authority (AFCA) against MWL Financial Services Pty Ltd (in Liquidation) involving advice to invest into the Shield Master Fund and bad insurance advice. This is an important decision for all investors involved in the collapse of the Shield Master Fund.
Background
The case involved two complainants who, after being cold-called in 2021, were referred to a financial adviser for a review of their superannuation. They were advised to set up a self-managed superannuation fund (SMSF), roll over their existing super into it, and invest the majority of their retirement savings into the Shield Master Fund. The advice also included recommendations about replacing existing insurance policies.
The complainants argued that the advice was inappropriate, not in their best interests, and left them with an undiversified, high-risk portfolio that did not align with their goals. They also suffered a significant loss when an insurance policy lapsed during the advice process, resulting in a missed trauma insurance benefit.
Key Findings of the Determination
AFCA found that the financial advice provided was not in the complainants’ best interests. The adviser failed to:
- Address the complainants’ core financial needs, including significant debt and cashflow issues.
- Provide accurate information about the performance of both the Shield fund and the complainants’ existing super funds.
- Justify replacing a suitable investment strategy with a riskier one.
- Assess whether the complainants were suitable to act as SMSF trustees.
- Properly manage conflicts of interest, as the adviser’s firm had undisclosed ties to the Shield fund’s investment manager.
In respect of the insurance complaint , AFCA determined that while the adviser agreed to provide insurance advice, they abandoned the process partway through. This led to a lapse in cover and a lost trauma benefit. However, because the complainant received direct notifications from her insurer about the impending lapse, AFCA apportioned responsibility 50/50 between her and the adviser.
The Determination awarded:
- $95,902.95 to compensate for losses from inappropriate investment advice.
- Up to $5,000 for costs associated with winding up the SMSF.
- $85,000 (50% of the lost trauma benefit) for the insurance lapse.
- Interest on these amounts until payment is made.
Why This Decision Matters for Shield Master Fund Investors
This determination is particularly important for investors in the Shield Master Fund because it:
- Confirms that advisers must act in their clients’ best interests and provide advice tailored to individual circumstances—not just promote products.
- Highlights that investments lacking diversification and with limited track records can be inappropriate, especially when recommended as a sole or core holding.
- Demonstrates that conflicts of interest—such as referral arrangements between advisers and product issuers—must be disclosed and managed transparently.
The Broader Lesson: Review Insurance Advice Received
The case also underscores how critical it is to review any insurance advice you receive.
FD Legal is aware that many investors received insurance advice from the same financial firm who advised them to invest into the Shield Master Fund and First Guardian Master Fund. In some cases, we are aware that the recommended insurance was more expensive than existing insurance, insurance recommendations not being implemented and insurance reviews not actually taking place.
If you received advice from the same advisor who recommended you to invest into the Shield Master Fund and First Guardian Master Fund, we recommend you review these arrangements to confirm that they are suitable for your circumstances.
This Determination sets an important precedent for investors caught up in the collapse of the Shield Master Fund and First Guardian Master Fund.
If you received advice to invest into the Shield Master Fund and First Guardian Master Fund and have concerns with the advice you received, we ask that you contact Financial Dispute Legal to discuss your circumstances and consider any rights to recover compensation on 1300 433 533 or enquiry@fdlegal.com.au
The Determination was case 12-25-233504 and can be accessed on the AFCA website.
