Dealer group Synchron has declared its intention to keep paying money earned by advisers daily, in the wake of a Federal Court decision likely to deny former Australian Financial Services authorised representatives access to nearly $2 million held in a "brokerage account".
As well, the Association of Financial Advisers (AFA) has urged its members to check the status of all similar accounts held by the dealer groups to ensure they are not similarly affected.
Commenting on the development, Synchron director, John Prossor said money owed to advisers in the form of client fees and commissions should be paid to them as soon as it is earned.
"Synchron believes that money earned by an adviser belongs to the adviser and should therefore be paid without delay," he said. "For this reason, Synchron has always paid advisers daily. We don't hold advisers' money in a trust account or any other account for any longer than we can help it."
However he pointed out that the daily payments were subject to the licensee having received a statement from the product institution that identified the advisers to whom the fees and commissions belonged.
"The non-payment of the AFS trust holdings is really unfortunate for the advisers who earned the money," Prossor said. "It's not the first time this kind of thing has happened. A very similar thing occurred when another licensee, Silvalake Financial Services Group, was placed into liquidation almost 10 years ago."
Affidavits filed in the Federal Court as part of the case mounted by former AFS authorised representatives suggested a formal ‘trust account' was never established because of concerns that doing so might impact the status of the dealer group's Australian Financial Services Licence.
Lawyers representing the former AFS authorised representatives are understood to have informed their clients that the Federal Court decision is technically correct and not capable of successful challenge.