NDIS housing scheme firm forced to refund fees for ‘lack of service’
by Max Mason and Jonathan Shapiro
ASR Wealth, the advisory firm behind a national Disability Insurance Scheme housing investment scheme forced to wind down some of its funds, has had to refund advice fees for a lack of service following complaints from investors.4
The Sydney-headquartered firm aggressively marketed double-digit “government backed” returns and raised millions of dollars from retirees and other investors to put into properties being build for patients who qualified for government-subsidised rents.
An investigation by the Australian Financial Review revealed at least 14 of these schemes face the prospect of being wound up after months-long searches to find tenants failed [https://www.afr.com/companies/financial-services/investors-hung-out-to-dry-as-ndis-housing-schemes-fail-20240626-p5jovm].
The schemes were marketed by ASR Wealth and overseen by DomaCom, an ASX-listed investment platform. DomaCom allows investors to pool money into a single property by purchasing units in a managed fund.
The Financial Review spoke to two retiree investors, who invested in a range of different NDIS housing projects that have faced significant delays.
While those projects were not among those being liquidated, the investors had tens of thousands of dollars in fees refunded. Those refunds followed an investigation of complaints conducted by a party associated with ASR Wealth known as APSEC Compliance and Administration. APSEC and ASR Wealth have a common shareholder.
APSEC did not substantiate a complaint about misleading or deceptive conduct from any advice given about the performance and risk of NDIS housing investments.
However, APSEC partially upheld a complaint about ASR Wealth’s upfront advice fees. Multiple investors have complained that they have found it difficult to get answers from ASR Wealth about their investments once they have been sold products.
“We propose to refund the appropriate proportion of fees charged for the lack of service and management and communications of investments,” APSEC said.
The two investors accepted the refund but did not sign away any rights to continue to make formal complaints for compensation through other channels, such as the Australian Financial Complaints Authority.
ASR Wealth staff have received advice by email on how to deal with inquiries that may come from customers who read the Financial Review investigations. The email advised them that they couldn’t comment on the performance of individual investment portfolios, b ut that each investor was given a financial services guide and supplementary product disclosure statement before being put onto the DomaCom platform.
The script said those documents outlined “projected, but not guaranteed, returns” as well as risks.
“The current challenges with finding tenants for the NDIS properties and potential liquidation of some funds are outlined in communications from DomaCom,” it said. “it’s important to remember that the projected returns were not guaranteed, and all associated risks were clearly stated in the provided documents.”
NDIS housing marketing material sent to investors by ASR Wealth employees, and obtained by the Financial Review, labelled the projects used terms such as “secure”, “stable”, “low risk”, “tenants secured long-term” and “government-backed”.
“Our new passive income opportunity is offering investors exposure to high-yield, government-backed investment property, which is NDIS … approved and estimating a return of 12 percent per annum NET (after fees, not including capital growth) paid monthly,” a 2021 email to an investor for a fund earmarked for liquidation said.
The ASR Wealth script sent to staff said the Financial Review’s article “failed to mention the number of NDIS investments which are performing as expected or even overperforming, providing satisfactory returns to investors”.
ASR Wealth did not respond to a request for comment.
DomaCom said in a statement to the ASX that difficulties it had had renting out “certain properties parties due to oversupply” had hit investors.
“The DomaCom fund has a broad range of asset types and notes the tenancy issues identified in certain NDIS sub funds are not present across other asset types,” it said.
For more information email Max or Jonathan on max.mason@afr.com or jonathan.shapiro@afr.com respectively.
