Over the last few years there has been a steep increase in the number of people being poorly advised to put their retirement savings into a Self-Managed Super Fund (SMSF) and then borrow to invest into off–the-plan property.
“Borrowing to buy off-the-plan property is incredibly high risk, which is not a level suitable for most consumers and certainly not with their superannuation funds.” Mr Ripoll said.
“Financial Rescue has seen an influx of clients who have ended up losing their hard-earned retirement savings in these type of schemes and has had success in lodging claims with the Financial Ombudsman Service (FOS). The consumers being misled into these “investments” are generally not in a financial position to be making investments with such high risk,” said Mr Ripoll. Superannuation is the Australian worker’s retirement funds and consumers tricked into these Self Managed Super Funds to buy off-the-plan property need to be protected and deserve to be able to recover their losses.
Over the last 5 years Financial Rescue has recovered over $8 million for victims of rogue financial advisers. Most financial advisers give good advice, but those who don’t can have a devastating effect. Mr Ripoll says that currently all the work at Financial Rescue is centred on helping clients who have been convinced to set-up a SMSF and borrow money to buy off-the-plan property. This in itself should be a warning to those considering setting up a SMSF to ensure the investments within it are appropriate.
He identified in-house accounting, borrowing from the same place that gave the advice, and buying a property chosen by the adviser, particularly off the plan, as key warning signs that the advice might not be in their best interests.