”I suffered a loss because of bad investment advice, so the financial advisor should compensate me.” Which case won?
Investment in mortgage fund for fixed rate of return
An investor was a long-term client and personal friend of the director of a financial firm.
The financial firm was the responsible entity of a mortgage fund, and the investor was a long-term investor in the fund.
The fund invited investors to invest in mortgages secured over real property and earn a fixed rate of return over a fixed investment term.
The investor and his self-managed superannuation fund (SMSF) invested a total of $172,000 in a second contributory mortgage in the fund.
No return to investor after property sold at loss
The corporate borrower defaulted on that mortgage and the property was sold at a loss. This resulted in only a partial return to the first mortgagee and no return to the second mortgagees, including the investor and his SMSF.
The investor complained to the Australian Financial Complaints Authority (AFCA), which assigned a case manager to investigate the complaint.