Last week, PIS and ASIC reached a mutual agreement to settle Westpoint proceedings on commercial terms, the dealer group said.
“Both PIS and ASIC regarded the settlement terms as being a reasonable outcome for investors. The Federal Court granted approval of the settlement terms last Friday, indicating its agreement that the settlement terms are reasonable,” the firm said.
“There will not be any appeal by Professional Investment Services.”
ASIC first took action against PIS in the Federal Court of Australia in December 2007.
At the time, ASIC alleged PIS was negligent in its provision of advice to investors in relation to Westpoint Group, and breached its Australian financial services licence.
The dealer group was one of seven Australian financial services licensees against whom ASIC commenced proceedings for compensation on behalf of Westpoint investors.
In this case, while ASIC alleged PIS was negligent in its provision of advice, the judgment found no such evidence.
“The ASIC proceedings have been settled for commercial reasons without any admission of liability on the part of PIS or its advisers. Professional Investment Services does not discuss individual matters relating to authorised representatives,” the firm said.
If we cast aside the rumours and innuendo from within the industry that suggests PIS should have seen this coming, the ramifications of such a ruling may have a domino effect for financial planners.
Despite there being no negligence found on behalf of the dealer group or any of its advisers, PIS has surely suffered reputational damage as a result of these court proceedings.
Some may suggest product failure has yet again been confused with poor advice.
Who’s to say the next dealer group or group of planners to face the legal system over product failure not poor advice won’t suffer the same fate as PIS?
Will this ruling open up greater scrutiny with regards to advice firms embroiled in the agribusiness claims against Great Southern and Timbercorp?
Now that’s not to say investors who lost their money do not deserve a compensation payout, though should a dealer group, regardless of its reputation, be forced to pay for a failure it had no control over?
What are your views on this?
Do you believe PIS deserves to pay compensation? Or is it a big fish that was too easy not to catch in the industry pond?
