Oct 7, 2014 - The amount that should be paid by the FSP to the Applicant is $3,347 for lost. Centrelink benefits, $3,000
Determination Case number: 334049
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7 October 2014
Overview
1.1 Dispute The Applicant is permanently incapacitated and in early 2013 sought advice in relation to investing her savings, which at that time were mostly in term deposits. The adviser, a representative of the Financial Services Provider (FSP), recommended consolidating her superannuation and making a non-concessional contribution of $450,000 and converting $240,000 into an account based pension. Subsequently, the Applicant sought a guarantee from the recommended fund that she would meet the permanent incapacity condition of release to ensure that if she implemented the advice, she could access her funds. The recommended fund operated by a related company to the FSP, would not provide this guarantee. The Applicant’s money remains in term deposits and the investment strategy has not been implemented to date. The Applicant claims she has suffered financial loss and incurred costs as a result. The Case Manager provided the parties with a Recommendation on the issues in dispute. The Recommendation was substantially in favour of the FSP, but required the FSP to pay the Applicant $170.
1.2 Issues and Key findings Were the findings of the Recommendation correct? The findings contained in the Recommendation were correct as to liability and are adopted in this Determination, other than the quantum of recommended compensation. Further submissions provided after the Recommendation have been considered. What is the amount of compensation payable by the FSP? The amount that should be paid by the FSP to the Applicant is $3,347 for lost Centrelink benefits, $3,000 for non-financial loss and $170 for the medical consultation fee.
Case No: 334049
Determination
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1.3 Determination This Determination is in favour of the Applicant. The FSP should pay the Applicant $6,517.
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Reasons for Determination
2.1 Were the findings in the Recommendation correct? I have decided this case on its merits, having regard to the relevant law, good industry practice, codes of practice and previous FOS decisions. I have taken into account all the material submitted by the parties, both before and after the Recommendation. I am satisfied that the documentation I have relied on has been provided to both parties. Except for the following comments I am satisfied that the Case Manager’s Recommendation contains an accurate summary of the dispute, the issues to be determined and any relevant law. The findings contained in the Recommendation are correct and are adopted in this Determination, other than the quantum of recommended compensation. A further submission was provided after the Recommendation and I make the following findings in relation to the factual issues raised: I accept that the Applicant was diagnosed with other serious medical conditions in addition to her schizophrenia I accept that as well as seeking advice as to how to invest her money securely and reduce her tax liability the Applicant was looking for a strategy to maximize her Centrelink entitlements.
2.2 What is the amount of compensation payable by the FSP? Date for calculation of loss is appropriate The Applicant’s representative disagrees that 2 October 2013 should be the end date for calculation of loss; however has not provided any reasons. I am satisfied that the start date of 20 May 2013 and the end date of 2 October 2013 for the calculation of loss is appropriate because the Applicant has an obligation to mitigate her loss and it was reasonable for her to do so after that date. There was a net gain in investment earnings I am satisfied that the Recommendation is correct in that the Applicant made a net gain of $1,706 in investment earnings for the period by having her funds invested in term deposits.
Case No: 334049
Determination
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The plan would have increased the Applicant’s Centrelink benefits The Applicant’s representative claims that the sole purpose of the plan was to ensure the Applicant received a full pension and has claimed the difference between what the Applicant actually received and the full pension. The SOA dated 9 July 2013 estimated that the Applicant would receive an increase in Centrelink benefits from $10,374 to $19,534. This equates to 19 weeks of increased benefits; $3,347 approximately for the period 20 May 2013 to 2 October 2013. I therefore determine that the FSP should compensate the Applicant for lost Centrelink benefits of $3,347. No compensation for lost taxation benefits The Applicant has claimed lost taxation benefits of $21,000, but has failed to substantiate this amount. I am unable to award the Applicant any compensation for lost taxation benefits. Compensation for non-financial loss The Applicant also claimed loss of her, her attorney and representative’s time, and for stress and inconvenience. Compensation for non-financial loss is limited. Under subparagraph 9.3(b) of the FOS Terms of Reference, FOS can award compensation for non-financial loss only where there has been “an unusual degree or extent of physical inconvenience, time taken to resolve the situation or interference with the Applicant’s expectation of enjoyment or peace of mind”. I consider it fair in all the circumstances of this case to award the Applicant $3,000 non-financial loss because: the FSP should have provided appropriate advice when initially consulted the Applicant’s health condition means that the inappropriate advice had a greater impact upon her and required the involvement of her representatives some of the FSP’s attempts to address the Applicant’s concerns; such as suggesting the Applicant deposit a small amount in superannuation and test whether she met a condition of release caused additional stress and inconvenience. No compensation for future losses The compensation awarded in this Determination constitutes $3,000 non-financial loss and $3,347 for lost Centrelink benefits. These are small compensation amounts which are unlikely to have a significant impact on the Applicant’s future Centrelink benefits or taxation liability. I therefore will not determine that the FSP is liable to compensate the Applicant for future losses. The FSP should pay $170 for the medical consultation
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Determination
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The Applicant also claimed for medical fees incurred to prove that a permanent incapacity condition of release was met. The FSP required the Applicant to obtain medical certificates for the purposes of obtaining pre-approval from the recommended fund’s Trustee. The Applicant paid $170 for a medical consultation to obtain a medical certificate. Because pre-approval was not possible, and the Applicant has substantiated the cost with a tax invoice, in my view the FSP should reimburse the Applicant for this cost.
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Determination
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