Former dealer group Libertas seeks to exit EDR scheme
Libertas Financial Planning has given notice to the Australian Financial Complaints Authority (AFCA) to cease membership of the body’s external dispute resolution scheme.
In an update, AFCA said this means victims will be unable to submit any complaints against Libertas once it has left.
“This means Libertas will continue to be a member of the AFCA scheme for a limited time only.
“AFCA can only accept complaints about firms that are current members of the AFCA scheme. Once an AFCA membership ceases, AFCA cannot accept any new complaints against that former member. However, AFCA can finalise complaints that were received before the membership ceased.”
Libertas, which was acquired by Sequoia Financial Group in August 2019, went into liquidation in May 2023. In a statement at the time, Sequoia said it planned to consolidate AFS licences, with management making the decision to transfer Libertas’ operations and customers to InterPrac Financial Planning and Sequoia Wealth Management.
The former dealer group is now managed by an external company.
AFCA’s involvement in Libertas relates to the troubled Sterling Investment Group as the investment manager of the Sterling Income Trust (SIT) was Sterling Corporate Services, which became a corporate authorised representative of Libertas.
The SIT was a retail managed investment scheme established as a funding vehicle for Sterling Investment Group. The group offered a long-term residential lease product to retirees and seniors called Sterling New Life Lease, which required investors to make an upfront payment into the SIT to fund ongoing lease payments.
Tenant-investors were told the returns from their invested capital would be sufficient to pay all of their rent, and some were told they would not need to make any other payments during their tenancy.
In 2017, ASIC began to look into SIT and issued an interim stop order on a PDS offered by SIT’s responsible entity Theta Asset Management. ASIC found the PDS for the SIT had inadequate disclosure of risk and conflicts of interest, omission of material information about the investment, presentation of prospective information about target returns and outdated and incorrect references.
In May 2019, the Sterling First group of companies collapsed after a downturn in the property market, product mispricing and the organisation’s complexity, leaving many tenants unable to meet their lease payments. Over 100 tenant-investors had obtained a long-term lease and another 465 had invested in SIT but did not hold a lease.
Theta was ordered by the Federal Court of Western Australia in November 2020 to pay $2 million and its managing director Robert Marie to pay $100,000 for contravening the Corporations Act in authorising the issue of five defective PDSs for SIT.
AUTHOR
Laura Dew
Recommended for you
Far too few wealth managers are capitalising on the opportunity presented by disruptive technology to deliver personalised investment solutions to the mass affluent demographic, according to PwC.
With over half of advisers using managed accounts, HUB24’s head of managed portfolios has unpacked the benefits driving their usage and how they can be leveraged by advice practices.
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
ASX-listed platforms HUB24, Netwealth, and Praemium have used their AGMs to detail how they are using artificial intelligence to improve their processes and the innovative opportunities it presents.
