Following the Australian Securities and Investments Commission's cancellation of the group’s AFSL in January, a number of disputes have emerged, with former authorised representatives claiming outstanding commissions and brokerage payments allegedly owed to them by their former licensee, and the appointed liquidator seeking outstanding debts owed by former advisers.
In order to adjudicate both the claims for commission payments and the outstanding debts, appointed liquidator Lawler Partners is now seeking the jurisdiction of the NSW Supreme Court.
“As there are insufficient funds available to pay advisers in full we are in the process of making an application to the court to seek directions on how the commission accounts should be distributed,” a spokesperson for the liquidator told InvestorDaily.
“We are also still in the process of recovering adviser debt/clawback commissions that advisers have failed to pay.”
However, in an email from Lawler Partners intermediate James France to a former AAAFI authorised representative – obtained by InvestorDaily – it is clear the liquidator believes the outstanding debts owed are a higher priority than the outstanding adviser commission claims.
“We issued an initial demand to adviser debtors and subsequently referred those who did not respond adequately to a debt collection agency,” Mr France wrote.
“Once we are satisfied that all amounts have been pursued and recovered to the greatest benefit of all advisers, we will then proceed with a distribution,” the email continued.
“As a condition of the transfer from the AAAFI licence to their new licensee, advisers with outstanding debts are required to pay same amounts to us. The debt collection agency [is] aware of this and are pursuing the same.”
The external debt collectors have had “some success” in clawing back debts ostensibly owed to the liquidator but “the most substantial debtors remain outstanding”, the email stated.
While the intervention of the courts may result in a favourable outcome for the advisers who have claimed for outstanding commission payments, the claimants spoken to by InvestorDaily were not expecting a resolution to the dispute.
One claimant, speaking on condition of anonymity, said the “whole TAL saga” – a reference to the liquidator’s facilitation of TAL’s purchase of an AAAFI-related client book for a figure thought to be below market value – has engendered a loss of confidence in the liquidator.
Another claimant, speaking to InvestorDaily on the same terms, said the liquidators were “killing time” and that legal advice provided to him suggests there is no reason why the debts owed should be prioritised over the outstanding commission payments.
The total claims for outstanding commission payments is in the order of $500,000, liquidator Bradley Tonks told InvestorDaily in July.
The Lawler Partners spokesperson said the liquidators will “shortly be issuing a notice to advisers detailing [their] intention to distribute trust assets”.
The company’s licence was cancelled in January due to findings of non-compliance with AFSL conditions by the corporate regulator, including “inadequate technological, human and financial resources, deficiencies in tracking and monitoring advisers, and failure to comply with the obligation to ensure that advisers were appropriately trained and compliant with financial services laws”.
