CFS blunder with Matrix letter gaffe

CommonwealthFinancial Solutions(CFS) and theColonial Master Fundhave suffered an embarrassing breach in the security of their files when a number of clients with theMatrix Planning Solutionsgroup received letters recommending they contact a CFS adviser.

The clients were invested in the Colonial Master Fund through Matrix and received the letters asking them to contact a CFS adviser about switching investments when the master fund withdrew a number ofBTfunds from its investment menu.

Coincidentally, Matrix had also removed BT from its own recommended list but did not authorise either CFS or the master fund to write to its clients.

Matrix national marketing manager Geoff Martin has confirmed at least a dozen Matrix clients across three planners had received the letters.

But he said the group had yet to find how the clients received a letter from a competing dealer group.

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“I met with representatives of Colonial First State and I am not aware of what has happened or how the client information jumped the barriers. Not all clients were approached so we don’t feel this was a deliberate action,” Martin says.

According to Martin, both the master fund and the Commonwealth dealer group were unaware of the letters when notified of it last week, which led to a meeting between Colonial and Matrix, with the former stating they would investigate the matter.

At the time of going to press, Colonial had not responded to requests fromMoney Managementfor further information.

Despite Martin’s reserve, Matrix adviser and Association of Financial Adviser’s (AFA) Queensland director Robert Ross is unhappy with the letters sent to his clients and has questioned the security of files held within the Commonwealth financial services group.

He says that despite being presented as separate entities, CFS had access to information from the master fund regarding clients with other dealers and not only was this bad business practice but was also a breach of privacy laws.

Ross also questions whether Commonwealth financial services is a “fit and proper group”, stating that Colonial had indicated to him that Matrix was not the only dealer group involved.

He also rejects the relatively low numbers of clients who appear to have been approached, stating the group was unaware of the actual numbers, as the clients approached the Matrix planners to notify them about the breach in the first place.

Martin says Matrix will wait until it receives further information from Colonial before taking any specific action, and that the dealer group would examine the issue from the perspective of whether it had disadvantaged clients.