AFS brokerage account decision creates uncertainty
The Association of Financial Advisers (AFA) has expressed concern at a recent court decision that more than $1 million held in a trust account of failed dealer group Australian Financial Services (AFS) will not be distributed to advisers still owed outstanding payments.
A court application was made by AFS administrators BDO regarding the nature of funds held in the AFS Group Brokerage Account.
Late last week the Federal Court of Australia decided that amounts received in the AFS Group Brokerage Account, including those generated as commission and fees from the advice and other activities of current and former authorised representatives of AFS, were not held on trust for those authorised representatives.
AFA chief executive Brad Fox said the development had generated considerable concern in the adviser community about the status of dealer group brokerage accounts.
He said he believed all advisers should make themselves aware of the status of funds held in accounts and where they might be directed in circumstances similar to those encountered by AFS.
"They need to ensure who owns the money when things go wrong," he said.
Fox said advisers should also consider the length of payment cycles from licensees and the time taken to process new business.
AUTHOR
Mike Taylor
Recommended for you
A relevant provider has received a written direction from the Financial Services and Credit Panel after a superannuation rollover resulted in tax bill of over $200,000 for a client.
Estimates for the calendar year 2024 put the advice industry on track for a loss in adviser numbers as exits offset gains from new entrants.
Adviser Ratings shares five ways that financial advice changed in 2024 with an optimistic outlook for 2025, thanks to the Delivering Better Financial Outcomes legislation.
National advice firm Invest Blue has announced several acquisitions, including the purchase of an estate planning and wealth protection business Lambert Group.
