The private contractual nature of Buyer of Last Resort (BOLR) arrangements has meant that the major financial planning organisations have had little scope to become involved in the issues which have arisen between planners and their licensees.
Amid continuing reports that the value of BOLR arrangements have been eroded through the so-called “weaponization” of compliance audits and the Government’s decision to hand the Australian Financial Complaints Authority (AFCA) the ability to look back at complaints dating back 10 years, advisers have found themselves facing some tough decisions.
This much was acknowledged by Financial Planning Association (FPA) chief executive, Dante De Gori, who said while issues around BOLR had been raised by members during his organisation’s recent national roadshow, there was little that could be done because of the individual nature of the BOLR contracts.
He said that, very often, the best advice that could be given was that affected planners should contact their lawyers.
Association of Financial Advisers (AFA) chief executive, Phil Kewin, said that his organisation was similar aware of some of the BOLR issues but not closely involved.
At least one of the problems which has emerged is adviser record-keeping in circumstances where industry convention has held that records should be kept for a minimum of seven years but where the Australian Securities and Investments Commission (ASIC) fee for no service investigations and AFCA’s legacy complaints changes are looking back 10 years.
Advisers have told Money Management that the imposition of tough compliance audits had seen the value of some BOLR pay-outs reduced to as little as one times earnings.