Professional Investment Services ruling riles battered financial planners

PIS took a reputational hit when ASIC announced it had reached a settlement on matters relating to a class action tied to the collapse of Westpoint.

One of Australia’s most significant dealer groups, Professional Investment Services (PIS), took a serious reputational hit last week when the Australian Securities and Investments Commission (ASIC) announced that it had reached a settlement with PIS on matters relating to a class action tied to the collapse of Westpoint.

The settlement was reached with PIS without any admission of liability on the part of the dealer group, but the reputational damage was as a result of assumptions drawn from the announcement that PIS would be paying compensation to affected investors.

There were two implications that might have been drawn from the payment of compensation — one being that PIS was compelled to do so, the other that it wanted to do so as a gesture of goodwill.

If reader comments to www.moneymanagement.com.au are to be taken as a guide, many people chose to believe the former and not the latter.

Putting aside questions of interpretation, the reaction to the ASIC announcement represents proof of the power of statements by Australia’s major financial services regulators.

Just as AMP Financial Services found itself suffering reputational damage as a result of an enforceable undertaking entered into more than three years ago, PIS has found itself similarly on the back foot.

Irrespective of the fact the ASIC statement on the settlement carried no suggestion of wrongdoing or illegality on the part of PIS, some people chose to view the settlement outcome in a negative light.

The regulator said the Westpoint collapse had “involved many distinct Westpoint funds, a large number of financial planners and advisers, different classes of investors, receivers and liquidators within a complex network of legal claims and rights”.

The problem for PIS is that while it was not the only financial planning dealer group impacted by the collapse of Westpoint, it was the largest and undoubtedly the best known. And, as indicated by the tenor of comments to the Money Management website (a number of which could not be published for legal reasons), it has no shortage of detractors.