Bradley Tonks of Lawler Partners, the liquidator appointed to AAAFI and related entities, has confirmed that a number of aggrieved former authorised representatives are still seeking brokerage and commissions payments owed to them by their former licensee, as reported by ifa this week.
Mr Tonks said that the $900,000 figure identified by some former advisers as the total claims value for outstanding commissions was only a preliminary estimate and no longer realistic.
“I think this is probably overstated and we are anticipating that claims for outstanding commissions will be in the order of half a million dollars, perhaps a little more,” he told ifa.
But despite the smaller-than-previously-thought claims value, Mr Tonks also confirmed that aggrieved advisers will not be receiving the full amount claimed.
“We currently hold around $170,000 in funds, so if there is $500,000 in claims then obviously we will be in a position where we will have to adjudicate those claims,” he said.
At the same time, the liquidator called on former authorised representatives to respond to recent correspondence regarding their claims, indicating some hope of advisers seeking redress.
“We do hold funds – albeit limited – and we hope to be in a position to make distributions in the near future,” he said.
A communication to creditors from Mr Tonks, obtained by ifa, revealed that the former directors of the company explained the reasons for the collapse in a report to the liquidator in March.
The report as to affairs (RATA) of the company’s financial position singled out “rogue advisers within the AAA Shares business [an entity wholly owned by AAA FI] engaging in products that were not on the approved product list” and subsequent legal and insurance premium costs.
However, Mr Tonks stressed that much of the “rogue advice” at AAAFI occurred five or six years ago and that therefore the collapse does not necessarily reflect the behaviour of the directors who oversaw the company at the time of the licence cancellation or authorised representatives operating under the banner at that time.
“But there are some important questions that still need to be answered,” he added.
Folks, Staff get looked after first, then secured creditors, then unsecured Creditors last (they get an equal share of whats left over after staff and secured creditors. Adviser Comms are deemed to be unsecured and will get cents in the dollar like all other unsecured creditors. Thats a fact of life!, no surprises here. Whats a deem shame is a group of small business people won’t get paid for the work they have done.
Liqidators always take their fees first.
Secondly, my view is that advisers who are not directors of a AFSL should NOT be allowed to have shareholdings in that AFSL more than say 5%, even if the shares are in escrow. Thats a “conflicted ” situation.
As usual, ASIC is bruising its hands-they really do not care about the welfare of advisers – its all power to the AFSL, or the liqidators of a failed AFSL. I think the term is “un-secured creditors”
BTW this episode appears to have no connection with FOFA per se, but even the large insto owned AFSLs will have their profits squeezed by FOFA. Watch those adviser fees rise folks !