ASIC will not release a review into financial planning firm Poynter Hargraves

ASIC instigated a review into troubled financial planning firm Poynter Hargraves earlier this year - but will not release the findings of the review to the public.

An independent review of financial planning firm Poynter Hargraves, which was the result of targeted surveillance by the corporate regulator, will not be released for public scrutiny in part because it might damage the business.

News Corp Australia applied for a copy of an independent expert’s review into the firm, which has thousands of clients across South Australia, New South Wales and Queensland, which ASIC demanded be carried out after it found that Poynter Hargraves had “poor risk controls around conflict management and was not adequately monitoring and supervising its representatives’’.

ASIC also said in February that its surveillance of the firm “also found that some clients were provided with financial advice that failed to meet the best interests duty and related obligations’’.

Poynter Hargraves managing director Craig Hargraves. Sourced from website.

ASIC imposed additional licence conditions on Poynter Hargraves and asked it to engage an independent expert to conduct a review and make recommendations “on how its audit processes and conflict management can be improved’’.

“The independent expert must also pre-vet a sample of advice and report on the effectiveness of the improvements made by Poynter Hargraves,’’ ASIC said at the time

The review has been conducted and a report made to ASIC, but News Corp Australia’s Freedom of Information request seeking a copy of the review was rejected in its entirety.

A request for the report was initially made to ASIC’s corporate affairs team in July, when News Corp Australia was asked to request the document through the Freedom of Information process.

The nine-page letter detailing the reasons ASIC has refused the request indicate that Poynter Hargraves objected to the release of the review.

The company’s commercial interests were also considered when rejecting the application.

“I consider that the release of the document would cause damage to the third party by revealing details of its internal workings and systems,’’ ASIC’s FoI officer says in the letter.

“I have considered whether release of the document would unreasonably impact upon the business affairs of Poynter Hargraves.

“The document contains details of Poynter Hargraves’ business processes, its fee structure, and the systems that it uses in providing services to its clients.

“The release of this information is likely to damage Poynter Hargraves by making this

information available to its competitors thereby potentially diminishing the value of its commercial offering and potentially causing reputational damage to the business.’’

The privacy of some current and former employees was also considered in rejecting the application, with the independent expert having expressed some opinions “in relation to a number of the named individuals’’.

The FoI officer also said the “public interest” was best served by keeping the document confidential.

“I believe that the public interest in this instance is more heavily weighted toward upholding the confidentiality of information that relates to the private commercial dealings of third parties, particularly in the circumstances where the independent expert is due to provide a second report on the steps taken by the business to address the issues that have been highlighted,’’ the letter says.

“I am therefore satisfied that the public interest favours the protection of the commercial interests of these individuals and entities.’’

News Corp had previously sought information about the ASIC review into financial planners Poynter Hargraves.

Documents previously sourced by News Corp Australia showed the first review would have a particular focus on the company’s advice around switching clients into its own product, Executive Choice Investments (ECI).

The review was to look at:

• The licensee’s real or perceived conflicts of interest regarding ECI, if any, to test whether the licensee is compliant with its obligations … to have in place adequate arrangements for the management of conflicts of interest, and

• The expert’s opinion on whether and how each client should be remediated for any financial loss or other detriment suffered because of the advice.

The second review was expected to assess the effectiveness of any changes suggested in the first report and include a random review of 10 personal advice files.

Two complaints to ASIC, which News Corp Australia has a copy of, allege that the Poynter Hargraves business model is based on moving clients from their existing retirement products into the in-house product, ECI.

The firm is also in dispute with five financial planners who sold their client books to Poynter Hargraves and claim they have not been paid their second and third tranche payments – a claim which has previously been rejected by managing director Craig Hargraves.

Mr Hargraves declined to comment on Thursday.

Poynter Hargraves started in Adelaide in 1987, and now has offices in Parramatta and Miranda in NSW and Brisbane, Cairns, Mackay and Rockhampton in Queensland.