Silvalake collapse sparks investigation
TheFederalParliamentary Secretary to the Treasurer, Ross Cameron, has ordered an investigation into the access by Silvalake Financial Services’ advisers to their client files and remuneration after the Brisbane-based advisory group was placed into liquidation.
The liquidation of the group, which has 52 advisers and 50,000 clients, was court-appointed on February 4, with the group assenting to the move according to Jason Bettles, principal with provisional liquidator Downie and Associates.
Bettles says Downie and Associates became the provisional liquidator for Silvalake Insurance Brokers, which holds the brokerage, insurance and financial planning authorities, after Silvalake indicated it could not make remittances to a general insurance group sparking the closure.
Silvalake offered a range of travel, general and motor insurances alongside its risk insurance and financial planning businesses. Owner Andrew Clarke had yet to respond toMoney Managementenquiries at the time of going to press regarding the fate of the business.
At the time of the liquidator’s appointment, the group had been placed in administration with all client files and adviser commissions frozen.
However, Bettles says a transaction has concluded which resulted in many of the Silvalake advisers moving across toTotal Financial Solutionsat the end of January, which the liquidator approved, allowing the final elements of the deal to be concluded late last week.
Since then, the liquidator has also released client registers and commissions, and is working through the release of adviser remuneration that advisers were due to receive at the end of last month.
“We are not releasing further commissions until we can work out who owns what under the business agreements,” Bettles says.
The move into liquidation has sparked anger and concern among theAssociation of Financial Advisers(AFA), with president Robin Yates questioning the protection for advisers and clients in instances where advisory groups go out of business.
Yates and AFA research officer Dugald Mitchell raised the issue in a meeting with Cameron and Senator John Watson last week.
Yates says Cameron stated he would instigate a Treasury Department investigation into the events and implications of the Silvalake closure.
“The industry is still contending with the issue of the ownership of the client in situations like this, due to the unintended consequences of acting on the Wallis Report which removed the protections that existed under previous regulation,” Yates says.
“In a liquidation situation, the remuneration for advisers stops with the receiver holding assets until it determines who are the creditors, which means advisers become a creditor and have to line up for their trail commissions and registers of business.”
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Jason Spits
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