The Federal Court of Australia’s decision not to pay AFS advisers money due to them has caused outrage in the advice community.
Administrators were appointed to AFS in April. Rachel Burdett-Baker and Luke Targett from BDO were appointed to halt the payment of unsecured creditors’ accounts while they assessed the financial position of the company.
The Court this month declared that the amounts received in the AFS Group Brokerage Account, in respect of commission and fees arising from the advice or other activity of AFS authorised representatives, are not held on trust for the authorised representatives or former authorised representatives.
Synchron director John Prosser says this is a matter of grave concern, and it is not the first time this has happened.
“A very similar thing occurred when another licensee, Silvalake Financial Services Group, was placed into liquidation almost 10 years ago.”
He says that to lessen the impact of decisions like these, money owed to advisers in the form of client fees and commissions should be paid to them as soon as it is earned.
“Synchron believes that money earned by an adviser belongs to the adviser and should therefore be paid without delay,” says Prossor. “For this reason, Synchron has always paid advisers daily. We don’t hold advisers’ money in a trust account or any other account, for any longer than we can help it.”
Daily payment is subject to the licensee having received a statement from the product institution that identifies the advisers to whom the fees and commissions belong.
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