As NextGen sees its Australian financial services licence (AFSL) cancelled by ASIC, Money Management tracks a torrid period for the licensee driven by an AFCA complaint regarding inappropriate advice.
The complaint relates to the inappropriate advice given to a self-managed superannuation fund (SMSF) trustee back in 2016 which has led to the firm ultimately falling into liquidation.
Money Management looks back at how the firm’s troubles have developed:
August 2016
WJ & V Drakoulis Super Pty Ltd (as trustee for the WJ & V Drakoulis Super Fund) received personal advice to establish an SMSF to purchase a residential investment property. However, there was a delay in the settlement of the investment property.
In the interim, the $175,000 that had been put aside for the property purchase was invested into Fund I for a one-year term, which meant the property purchase was unable to be completed.
The trustee then complained to the Australian Financial Complaints Authority (AFCA) that they received inappropriate advice to invest in Fund I.
November 2022
AFCA determined NextGen should pay $261,394.90 compensation and provide a transfer of its units in Fund I, but NextGen failed to respond to the determination or dispute the debt.
July 2023
NextGen was ordered by the Federal Court to pay the SMSF trustee some $270,000 over the unpaid AFCA determination regarding inappropriate financial advice.
September 2023
NextGen lost 23 advisers in two weeks – 10 in the week to 31 August and 13 in the week to 7 September – which brought its total adviser number to 20, down from a peak of 123 in 2019. It had begun the year with 46 advisers, according to Wealth Data.
September 2023
NextGen stated that it was unable to pay the debt, and the plaintiff WJ & V Drakoulis Super Pty Ltd applied for it to be wound up. In the Federal Court, it had previously argued the debt was not due and payable as an AFCA determination does “not have the effect of creating a debt enforceable by the way of statutory demand”.
October 2023
A hearing was held on 3 October to decide if the firm should be wound up.
November 2023
Joseph Loebenstein of Victoria-based insolvency firm Loebenstein Insolvency was appointed as liquidator by order of the court, placing the firm in liquidation since 17 November 2023.
February 2024
ASIC cancelled the AFSL of NextGen, effective from 23 February, because the company was being wound up.
