“The relevant provider gave advice in January 2023 recommending a client make a superannuation non-concessional contribution of $329,000 in the 2022/2023 financial year when the client’s non-concessional cap for that year was $220,000,” the FSCP said.

“When giving the advice, the relevant provider failed to obtain or take into account the client’s superannuation assets in the client’s PSS pension fund. As a result, the client needed to withdraw $120,735 from their superannuation and pay tax on the associated earning of $13,570.”

The sitting panel determined that it “believed that the relevant provider contravened sections 961B(1), 961G and 921E(3) [of the Corporations Act] specifically they did not demonstrate compliance with Code of Ethics’ value of diligence and Standard 5”.

Standard 5 of the Code of Ethics details that all advice and financial product recommendations given to a client must be in the best interests of the client and appropriate to the client’s individual circumstances. An adviser must be satisfied that the client understands the advice, and the benefits, costs and risks of the financial products recommended, and the adviser must have reasonable grounds to be satisfied.

Other than taking no action, a written reprimand is the lowest level of action available to the FSCP.

The reprimand will not be published on the Financial Advisers Register, however, it is provided to the adviser’s Australian Financial Services Licensee.

The announcement follows the FSCP reprimanding another adviser for failing to ensure their client understood their CGT liability.

According to the FSCP, the relevant provider gave advice to a client in March 2022 that included a recommendation to make a tax-deductible contribution to superannuation to reduce the tax liability from expected capital gains from the planned sale of an investment property.

“The relevant provider was advised of the sale of the property in July 2022 and in August 2022, the relevant provider confirmed the contribution could be made,” it said.

“However, the contract of sale for the property was signed in the 2021–22 financial year and the client did not have taxable income in the 2022–23 financial year to get the benefit of the tax deduction.

“The relevant provider did not explain to the client that the capital gains tax (CGT) liability arises when the contract of sale is signed or take steps to confirm when the contract was signed before implementing the advice.”