Jacqueline and Hugh McDowall’s retirement dream to buy a bed and breakfast business turned into a financial nightmare.
Due to poor financial advice from a Westpac planner, the nurse and truck driver lost their family home pursuing a dream that was never going to become a reality.
The plan was to put their combined $200,000 in superannuation into a self-managed super fund and use it to buy a property to live in and operate the B&B.
They were excited and confident they were getting professional advice after meeting with a senior Westpac financial planner in 2015, Ms McDowall told the banking royal commission on Thursday.
That was even before a business banker told them: “You’re in the right place. I’m the moneyman. I’m the one who can lend you up to $2 million.”
The McDowalls sold their Melbourne home, using the proceeds to clear the hefty mortgage and set up the SMSF.
They also took out the recommended new life, income protection and other insurance policies – costing almost $27,000 a year in premiums – and paid more than $5000 upfront for advice that also attracted an ongoing $3000 annual fee.
They then learned they could not borrow what they needed.
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“I just felt that we had been led up the garden path and lied to, just for the Westpac bank to get their bit of the insurances, which were now being taken from our super funds,” Ms McDowall told the commission.
Michael Wright, a senior executive in Westpac’s wealth management division BT Finance Group, admitted the advice was poor and the plan was wrong from the outset.
“It’s very clear this was not a viable strategy for the McDowalls,” he told the commission.
“I’m sure the McDowalls were passionate and excited about what their future could look like but the reality was it wasn’t viable.”
A Westpac staffer who investigated the McDowalls’ complaint noted: “There isn’t any lender in the market that would provide credit for this type of purchase.”
After a long process involving the Financial Ombudsman Service, Westpac paid the McDowalls $47,000 for the losses on the sale of their home and $60,000 for their superannuation.
They are now working in the Northern Territory trying to save enough to buy another home.
“I just feel through this horrible situation through the Westpac bank, the advice that we were given, a bank that’s a big bank that I’ve been with for 16 years, for them to do that to their customers is absolutely and utterly disgusting,” Ms McDowall said.
“I hope no one ever has to go through it again.”