Bad financial advice occurs when an adviser fails to act in your best interests, provides recommendations that are inappropriate for your circumstances, or breaches legal and ethical obligations. This may include advising you to invest in high-risk products without explaining the risks, ignoring your financial goals, or failing to consider tax implications.
Under Australian law, licensed financial advisers must comply with strict standards governed by the Corporations Act 2001 and overseen by the Australian Securities and Investments Commission (ASIC). Advisers are legally required to prioritise your interests and provide clear, accurate and honest advice.
Review the Advice and Documentation
If you suspect something has gone wrong, start by reviewing all documents provided by your adviser. This includes Statements of Advice (SOA), emails, contracts, and disclosure documents. Pay close attention to whether your personal circumstances, risk tolerance, and financial objectives were properly considered.
From a Financial Service and Tax Law perspective, advisers must explain fees, commissions, and potential conflicts of interest. If these were unclear or omitted, this could indicate a breach of duty.
Seek a Second Opinion
Before taking formal action, it’s wise to obtain an independent opinion from another licensed financial adviser or a solicitor specialising in financial services law. A professional review can help confirm whether the advice was inappropriate or negligent.
Tax consequences are often overlooked in poor advice cases. A tax professional can assess whether incorrect strategies have resulted in unnecessary tax liabilities, penalties, or missed deductions.
Raise the Issue With Your Adviser
In many cases, issues can be resolved directly. Contact your adviser or their firm in writing, clearly outlining your concerns and any losses suffered. Financial service providers in Australia are required to have an internal dispute resolution (IDR) process.
Make sure to keep copies of all correspondence. Clear records are crucial if the matter escalates under Financial Service and Tax Law dispute mechanisms.
Lodge a Complaint With AFCA
If you are dissatisfied with the response, you can escalate your complaint to the Australian Financial Complaints Authority (AFCA). AFCA provides a free, independent dispute resolution service for consumers.
AFCA can investigate whether your adviser breached their obligations and may award compensation for financial loss. Claims often relate to poor investment advice, superannuation mismanagement, or tax-inefficient strategies.
Consider Legal Action
In more serious cases, legal action may be appropriate. A lawyer specialising in Financial Service and Tax Law can advise whether you have grounds for a negligence or breach of duty claim. Legal remedies may include compensation for losses, interest, and associated costs.
Time limits apply to legal claims, so it’s important to seek advice promptly.
Protecting Yourself in the Future
To avoid similar issues, always verify that your adviser is licensed via ASIC’s Financial Advisers Register. Ask questions about risks, fees, and tax implications, and never feel pressured into decisions you don’t fully understand.
A trustworthy adviser should welcome transparency and provide advice aligned with both financial goals and tax efficiency.
Why Financial Service and Tax Law Matters
Financial advice does not exist in isolation. Poor advice can trigger unexpected tax liabilities, affect superannuation outcomes, and jeopardise long-term financial security. Australia’s Financial Service and Tax Law framework exists to protect consumers and maintain trust in the financial system.
