InterPrac parent Sequoia Financial hands out super trustee complaint forms to First Guardian client investors
Hours after an investor lodged a complaint about InterPrac with AFCA, one of its directors was on the phone encouraging her to put in a complaint against her super trustee.
InterPrac Financial Planning’s parent company is so desperate to shift the Shield and First Guardian blame that it has taken the extraordinary step of handing investors cookie-cutter complaints against super trustees to lodge with the ombudsman.
When Carol McDonald* put in a complaint against InterPrac with the Australian Financial Complaints Authority this week, she knew she would be in for a long wait.
Like 6000 other Australians, Ms McDonald’s super was pumped into the failed First Guardian Master Fund which collapsed earlier this year. Minimal funds are expected to be recovered and complaints against InterPrac have inexplicably stalled, with some now close to a year old and without a case manager.
What Ms McDonald wasn’t expecting was to get a phone call from Justin Harding, who is an InterPrac director and the head of legal at its parent company, Sequoia Financial, just two hours after she outlined her grievances to the ombudsman.
The purpose of the phone call was not an attempt to resolve the complaint. Certainly, InterPrac and Sequoia have been pushing back against any allegations of wrongdoing as $700m of super money hangs in the balance. This is despite InterPrac representatives Venture Egg Financial Services, Miller Wealth and Reilly Financial being responsible for investing the savings of thousands of Australians into First Guardian and another failed fund, the Shield Master Fund.
Mr Harding, a risk and compliance legal specialist with three decades’ experience, was calling to inform Ms McDonald she could submit a complaint against her super trustee, Diversa Trustees.
So helpful was Mr Harding that he even provided her with a completed complaint form against Diversa.
“You can lodge a new complaint directly with AFCA with this (attached) word document. When you do, please let me know when you get an AFCA case number,” Mr Harding said in an email titled “AFCA – Path to financial restoration”, seen by The Australian.
This new complaint would not replace the claim made against InterPrac, he said. But it suggests Sequoia’s desperation to deflect blame as InterPrac faces investor payouts that could easily run into tens of millions of dollars, if not more.
Abusing AFCA process?
While AFCA does inform financial firms when it receives complaints about them, and discloses who is making the complaint, it does this to allow both parties an opportunity to mediate the complaint without AFCA getting involved.
InterPrac did not inform or seek approval from AFCA before moving to direct investors to make complaints against super trustees, The Australian understands.
In the new complaint against Diversa provided by Mr Harding, the focus is put on Diversa’s “complete lack of due diligence” in placing First Guardian on its platforms, the “lack of fund allocation levels for a new fund” and the “lack of due diligence in monitoring the investment growth”.
AFCA does not interrogate the management of a super fund, including due diligence or investment flows.
The Diversa complaint also references Macquarie Investment Management Ltd despite Macquarie having no exposure to the First Guardian fund, where all of Ms McDonald’s money was invested.
“I have also experienced material mental and emotional distress during this period, given my retirement funds have been at risk, and request AFCA provide that Diversa compensate me to the maximum amount allowable under the AFCA rules for the non-financial harm caused by MIML’s conduct,” the complaint, sent to Ms McDonald by Mr Harding, reads.
There is no clear path for AFCA to find any fault with the super trustees under its rules and investors may face an even longer wait before they see any money.
This is because AFCA has placed super trustee complaints in a holding pattern. It doesn’t know what to do with them and has simultaneously decided to review advice claims and trustee claims concurrently, suggesting investors will have no resolution to an advice claim until AFCA resolves the super trustee question.
Dylan Greenway, a financial adviser at Impetus Planning, reviewed the letter provided to Ms McDonald from Sequoia, finding that it wasn’t personalised and didn’t consider her circumstances, though he did note it stated her InterPrac claim still stands.
Mr Greenway has taken on dozens of the investors affected by Shield and First Guardian and has already put in more than 50 complaints about the advice provided to those investors.
“It appears to be a template letter designed for fast deployment for many clients and raises issues that may not be in AFCA’s remit,” he cautioned.
In response to questions from The Australian, an InterPrac spokesman said: “InterPrac notes that it has received requests from investors seeking help to understand the superannuation system and assisted members to navigate the regulatory path with the intention that members’ claims are heard appropriately.
“InterPrac fully supports superannuation members’ goals of being financially restored and believes this is consistent with its call for the activation of the Operational Risk Financial Requirement,” he said.
Ms McDonald told The Australian she had not sought out help from InterPrac.
It is the latest questionable action by ASX-listed Sequoia and its subsidiary in this sorry saga.
An investigation by The Australian revealed in August how the firm’s lawyers had told AFCA to knock back hundreds of claims submitted against InterPrac by victims of the fund collapses, arguing that the failures were due to a product issue and not poor financial advice, sources said.
At the same time, it was cutting ties with the advice firms at the centre of the scandal.
The firm has repeatedly called on trustees to remediate investor losses. This push has ramped up after Macquarie swooped in and said it would cover the $321m investors had lost in the Shield fund through its platform.
Equity Trustees, currently being sued by the corporate cop for alleged due diligence failures in allowing Shield on its platforms, is the only super trustee to have exposure to both Shield and First Guardian: $160m and $65m respectively was put through its platforms.
Netwealth’s exposure to First Guardian is about $125m, while Diversa’s is much higher, at $270m. There is little expectation Diversa could cover such losses given its financial position.
*The client’s name was changed to protect her identity.
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Originally published as InterPrac parent Sequoia Financial hands out super trustee complaint forms to First Guardian client investors
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