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Phoenix institute could be ordered to repay taxpayer

A TRAINING college shut down over allegations it ripped off disadvantaged students by promising free courses and computers will be pursued by the consumer watchdog.

The Phoenix Institute of Australia was placed into voluntary administration in March this year after its registration and approval as an education provider were torn up.

Its alleged that between January and November 2015, Phoenix preyed on prospective students through door-to-door marketing in poor areas, including Aboriginal communities and remote regional towns.

The institute offered diplomas in business, leadership and management, early childhood education and care, and community services work.

Brokers and agents acting on its behalf allegedly told potential students courses would be free, or that their student debts would never need to be repaid.

Some students were allegedly promised free iPads or computers in exchange for their enrolment, or cash incentives for recruiting others.

Students were allegedly signed up for multiple courses without their knowledge, and werent told how to withdraw from courses or terminate their enrolment.

Numeracy and literacy forms were allegedly completed by or under the direction of brokers or agents when students were incapable of doing so. Phoenix now stands accused of making false and misleading representations, and of unconscionable conduct.

The Commonwealth paid Phoenix $106 million for enrolments, with another $253 million in the pipeline, when the alleged scam was uncovered and the company collapsed.

The federal government is now seeking to recover the money its already handed over to Phoenix, and cancel any further payments it may be obliged to cough up.

The Australian Competition and Consumer Commission is seeking a declaration that Phoenix broke consumer law, arguing all affected customers should have their enrolment contracts declared void.

Phoenix applied unsuccessfully for a stay on the proceedings. Federal Court Justice Melissa Perry said there was significant public interest in the case and serious questions to be tried.

I have reached the view that leave to proceed should be granted to both the ACCC and the Commonwealth, Justice Perry said in handing down her decision.

If the allegations made by the ACCC are established, the respondents sought to procure a very substantial sum of up to $360 million from public revenue through misleading, deceptive and unconscionable conduct perpetrated upon highly vulnerable and disadvantaged people to their potential detriment.

Justice Perry said the fact Phoenix was no longer trading and may have no capacity to pay penalties was no barrier to imposing a sanction for general deterrence.

The ACCC and Commonwealth must not enforce any penalties, costs or refunds from Phoenix without leave from the court, she ruled.

The case will return to court at a later date.

Travel and property the most popular ways to spend a win or an inheritance

IT’S a problem that most of us would love to have but people faced with a sudden win or inheritance often don’t know what to do with it.

Of course it all depends on the size of the windfall but, with more and more Baby Boomers in line to receive inheritances it is a question worth asking.

Most Australians say if they won or inherited $100,000 they would rather take a holiday than save it for their retirement, a survey by BT Financial Group has found.

Nearly half of us would invest the money in a term deposit but 34 per cent would buy property or go on a holiday but only one in five said they would put it into their superannuation, the poll found.

And even those close to retirement age are not that keen on giving their super a boost, despite the generous tax implications available.

Its understandable that people are interested in travel and holidays and as a nation were pretty property obsessed, says Melinda Howes, BTs general manager of super. But when you think about an inheritance for those aged between 55 to 64 we would have thought super was more of an option.

Investing an inheritance in super in your 50s or 60s could be what makes the difference between a frugal and a comfortable standard of living in retirement, she added.

Younger people say buying a property would be their preferred form of investment while share ownership was not considered a priority.

Unfortunately, many people who suddenly come into money end up blowing it, says Deborah Kent, national president of the Association of Financial Advisers.

Quite frankly, a lot of people dont know what to do (when they come into a windfall) and they spend it, Kent says.

There is a lot of pressure from families but if they buy a BMW for all the kids they might end up with nothing.

She says a good financial adviser can weigh up your situations, take into account that you might want to go on holiday or have some fun with the money.

But they will also look at your longer term goals and examine your debt levels to ensure you make the most of that windfall.

Because its likely youll never get that money again, she says.

What to do if you come into a windfall

1. Take a deep breath Dont rush to spend it. If an investment sounds too good to be true it probably is.

2. Pay down debt first How much do you owe on your home loan? How many more years of school or uni fees do you have?

3. Investment implications if you choose to invest in property, what are the costs? What are the tax implications? Does the investment help your tax situation?

4. Getting help talk to a financial adviser who can help guide you through the information and help you weigh up the facts rather than making an emotional decision.

5. Dont be pressured family members may want a cut but dont go out and spend all the money on the kids before you have ensured yourself a lasting income.