In 2018, Hugo* was seeking help managing his self-managed superannuation fund (SMSF) and contacted a financial adviser recommended by a close friend.

 

 

Although the adviser charged a substantial monthly management fee, Hugo felt the cost was justified because it allowed him to step back from the complexity of running the SMSF himself.

For around four years, Hugo was satisfied with the service. However, he eventually noticed his fund balance was gradually declining. Concerned, he withdrew the adviser’s authority to manage the SMSF and resumed control of it himself.

As Hugo began working through the administrative tasks involved in taking back control of his SMSF, he discovered that two of the funds in which he held significant investments had been frozen in 2020 and were now essentially worthless.

Hugo had never been informed of this. Had he not resumed managing the SMSF himself, he may not have realised for years.

Concerned, he reached out to a former business associate who had originally recommended the adviser and urged him to review his investments. It quickly became clear that Hugo was not the only person affected.
Hugo proceeded to lodge a complaint with the Australian Financial Complaints Authority (AFCA).

AFCA ultimately found in his favour, determining that the adviser had incorrectly classified him as a wholesale client when he should have been treated as a retail client.

Fortunately, the financial firm involved was still solvent at the time, allowing Hugo to negotiate a payment plan for the compensation amount determined by AFCA.

After receiving around sixty percent of the total, the firm entered liquidation, leaving a substantial portion of his entitlement unpaid.

Hugo was then advised to submit a claim to the CSLR for the remaining amount. He was deemed eligible and received compensation in December 2025.