Speaking to ifa yesterday, John Telford, secretary of the Illawarra-based ‘Victims of Financial Fraud’ organisation, said the financial advisers that recommended investment in Trio and Astarra to clients have been unfairly targeted – with former adviser Ross Tarrant of Tarrants Financial Services in Wollongong particularly singled out.
“I think there is something like 98 financial planners from the industry funds [that recommended Trio] and then there’s about half a dozen out in the retail so out of all of those, just somehow, Ross Tarrant has become the scapegoat and the focus became upon him.” Mr Telford said.
Mr Telford said the advisers recommending Trio products were doing so in accordance with a “green light” from relevant regulators.
“They made certain recommendations under the conditions at the time that it was ticked off by ASIC, it was ticked off by APRA, it had even a couple of banks that were trustees,” he said. “It had the green light by the gate keepers; it was [found to be] creditable by the auditors and so on.”
Mr Telford’s comments follow similar views presented by fellow ‘Victims of Financial Fraud’ member Kay Gal, who lodged a submission with the Senate inquiry into the performance of ASIC, made public yesterday.
Ms Gal also pointed the finger squarely at the corporate regulator. “[We] are suffering from the ineptitude of the so called ‘gate keepers’ of the Australian financial investors who have obviously failed in their duties to protect us,” Ms Gal wrote in her submission.
“As a victim of the Trio Capital fraud we were under the impression that ASIC were the financial regulators and were [supposed] to create confidence in the market place.
“Giving a license to an alleged fraudster to handle Australian superannuation money betrayed our confidence.”
In April 2011 the government announced it would pay $55 million in compensation to victims of the Trio Collapse under a scheme available only to APRA-regulated funds. As an SMSF trustee, compensation was unavailable to Ms Gal.
Mr Telford said his organisation will continue lobbying the government for compensation.
Correction: This article previously expressed that Ms Gal “voiced her displeasure with Mr Tarrant, her former financial adviser”. A spokesperson for Tarrants Financial Services, who is in contact with Ms Gal, subsequently told ifa the aforementioned “alleged fraudster” is not a reference to Mr Tarrant but to other parties involved.
Should advisers and stock brokers be shot because HIH or Babcock and Brown went to the wall. Don’t know about others but I am not a company auditor, I rely on my investigations yes, but I also rely on broker reports, publicly available information etc. Sometimes industries and markets just evaporate.
It will never guarantee 100% success, it can’t.
What really made me discount your comments was blaming the salami seller, yes some responsibility but only to a “reasonable level” and only if applied correctly.
After that the blame must fall elsewhere (i.e. the providers), typically this is not the case, planners get blamed for things that is not their responsibility.
So David the Salami seller sends samples off EVERY DAY to make sure it is safe to eat? Or does he check that provider is an established player (hopefully), has good people, processes and an ethical mindset?
Once this has been completed how often does he go back? Does he swab the grinder every day for bacteria, does he get involved in new recruits to the business?
As I said due diligence and reasonable person, no guarantees are nor should be provided by planners. How can they be responsible for something they don’t actually do and how reasonable were the investigations?
There will still be blowups and failures – it happens in the real business world every day.
Irresponsibility comes when allocations to riskier assets are too concentrated and/or not in the clients interests.
The fact that an element of the portfolio failed is just life in the jungle, some companies go to the wall.
Frank has put the article in perspective and I wonder ‘Wildcat’ how you can call my comments ludicrous and at the same time agree with them – in your words ‘ Blaming the regulator is a little light on and planners must pass the legal definition of reasonable person and fiduciary due diligence and best endeavours’. I know a lot of high quality financial advisors – and they OWN their recommendations. So to my original point – any action against regulators I view as opportunist at best.
Point of correction. John Telford stated that “I think there is something like 98 financial planners from the industry funds [that recommended Trio]”…
The fact is that Trio was not on the Approved Product List for Industry Fund Services meant that not one of our 75 advisers recommended Trio.
John Telford’s comments are factually incorrect. Thanks.
David, you are joking surely? Transactions are more serious than killing someone??? Gimme a break – remember South Australia??
Yes planners have a due diligence obligation however they are not the compliance managers for product providers, they cannot audit, every process, every system for every manager they recommend and then continue to monitor them every month or so to this level.
Planners must rely on professional researchers and professionalism of managers. Blaming the regulator is a little light on and planners must pass the legal definition of reasonable person and fiduciary due diligence and best endeavours.
The upside risk of investments to clients and downside risk to planners is completely unacceptable and patently unfair.
Your suggestions are ludicrous unless you are just trying to wind people up, if so please go away.
Interesting pov Jurgen if it wasn’t so serious. If you are recommending products your PI insurer (and – oh yeah – your client) would expect you to satisfy yourself, with diligent processes, of the bona fides of those products. That is not the job of the regulator – surely you know that! Same responsibility as the seller of the salami but because the transactions are so much more significant the onus is much greater! I’d still love to see substantiation of the allegations though.
David – just as financial planners have been unduly blamed for product failures beyond their control due to the fact that we have PI cover and can ‘pay big’!! What a ludicrous comment, if the regulator didn’t commit enough resources or do their job and then planners recommended, who is more at fault – the supermarket who sells the packaged salami, the manufacturer who produced it substandard or the health inspector who didn’t do their job correctly??
I am certain that before reporting these allegations in such a confident manner you would have satisfied yourself that included allegations of APRA and ASIC approval of Trio operations were true. I would be really interested in a follow up article on the detail of the APRA and ASIC transgressions alleged. On the other hand this could be a classic example of ‘throw dirt at those who might have capacity to pay really big and unreasonable damages!!’ (in this case, the Australian taxpayer)