The ex-chief executive of Trio Capital (Trio) has rebutted his own comments regarding the activities of financial planners, stating advisers should not be blamed in relation to the fund manager’s collapse.
Shawn Richard, who is serving close to three years prison for his involvement with Trio, made the surprise admission in an additional submission to the Parliamentary Joint Committee (PJC) on Corporations and Financial Services inquiry into the collapse of Trio and related matters.
“In my opinion, financial planners should not be blamed in relation to the collapse of Trio Capital,” Richard wrote in the submission, received by the PJC yesterday.
“Financial planners along with their clients all had a justified expectation that the ASF [Astarra Strategic Fund] had gone through multiple layers of checks and balances by all relevant industry participants prior to the product being made available to the public.
“Additional layers of checks and balances were also performed by the financial planners.”
Richard said in his experience, financial planners relied on “reputable research houses” to conduct detailed due diligence on the ASF prior to any consideration.
“Therefore, if a financial planner requires a product to have a minimum “recommended” rating by the research house before it makes it on an approved list, combined with all the many expected checks and balances by all other industry participants which relate to a financial product, I find it difficult to lay much blame on a financial planner when a product fails,” he said.
Richard also used his second submission to clarify his opinion in regards to self-managed superannuation funds (SMSF).
“Financial planners were not at fault for recommending their clients to invest through an SMSF,” he said.
“I was simply making the point that in my opinion, SMSF clients did not have any material advantage compared to the other investors who received compensation from the government scheme.”
Richard’s clarification comes a week after he released potentially damning claims against Australia’s financial planning and superannuation industry.
He has not made any clarification over his comments regarding superannuation funds.
Last week, Richard filed a submission to the PJC that alleged that a large number of financial planners who invested their clients in one of Trio’s fund, ASF, doubled their clients’ exposure by using margin facilities.
“I am aware of some SMSF [self-managed superannuation fund] investors who, on the advice of their financial planner, not only invested in the ASF but also used margin facilities to invest into the ASF, doubling their exposure,” he said.
“In relation to the ASF, I strongly believe that 95 per cent of all investors had one thing in common; they were all 100 per cent reliant on the advice of their financial planner to invest their superannuation monies into the ASF.”
Richard also claimed that the Australian Prudential Regulation Authority guidelines on superannuation liquidity requirements within the funds management industry are not scrutinised enough and that many funds do not meet the minimum requirements.
Trio collapsed in late 2009, resulting in the loss of more than $100 million in investor funds.
The PJC is scheduled to release its Trio recommendations to government next week.
