AFS planners face PI uncertainty
Speculation surrounding the future of the Australian Financial Services (AFS) Group has increased amid questions about its ability to provide professional indemnity (PI) insurance for financial planners still with the group.
According to documents passed on to Money Management, AFS Group's current PI cover is due for renewal on April 30. Under RG126, AFS is required to have adequate PI insurance arrangements in place for its authorised representatives.
However, many of the financial and administrative functions of the group have been suspended after it was placed in voluntary administration earlier this week.
The administrator, BDO, stated at the time that "the effect of our appointment is to place a moratorium on the payment of unsecured creditors' accounts in relation to trading and other debts incurred up to the date of our appointment, until creditors make a decision about the Group's future".
In the event that AFS is unable to renew its PI insurance, the group may be required to hand back its Australian Financial Services Licence and suspend advisory activities for planners who have yet to find a new licensee.
BDO further stated that the transfer of financial planners to other licensees was incomplete "due to the withdrawal of existing financial accommodation".
The exact numbers of advisers remaining with AFS remains in doubt, with the Money Management Top 100 Report listing 229 advisers at June 2012, while one page of the AFS website states the group has around 125 advisers — but its state-based list of planners totals only 94 planners. Industry reports estimate that more than two dozen have left for other licensees such as ANZ, BT, InFocus.
AUTHOR
Jason Spits
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