Sequoia warns of impairments linked to Shield and First Guardian fallout

The financial services firm has noted a number of impairments for the first half of FY26, including provisions for potential claims against its professional indemnity insurance.  

In an announcement on the ASX, Sequoia Financial Group outlined that it is making provisions for the potential fallout of its subsidiary InterPrac’s role in the Shield and First Guardian failures, which it stressed are “external investment products not issued or operated by Sequoia”.

It said the move was part of its “disciplined and conservative approach to balance sheet management”, and Sequoia expects to recognise “several non-cash impairments and provisions in 1HFY26”.  

This includes a provision for potential claims under the insurance excess payable under its professional indemnity insurance and “impairment of intangible assets pertaining to the Licensee and Adviser Services Division”.

“The impairment of intangible assets adjustment are non-cash in nature and will not affect underlying operating cash flow or the ongoing performance of the group’s core business units,” it added.

The market update was broadly bullish, despite what it described as “challenging conditions”, with the broader group outperforming the previous corresponding period in terms of EBITDA.

Based on the unaudited year-to-date figures show the Licensee and Adviser Services division at $1.86 million EBITDA, up from $1.55 million pcp, while its Legal and Administration Services division was up from $1.26 million to $1.65 million.  

This result is prior to any allocation of Head Office costs, impairment charges or non-operating expense items. (more detail below)

“The Company expects underlying 1HFY26 EBITDA to be ahead of 1HFY25, driven primarily by the strong growth being experienced in our technology-enabled Legal and Administration Services Division and improved performance in the salaried advice business,” Sequoia added.

The update also included an update on its settlement related to a “2019 advice matter associated with the (now closed) Libertas Financial Planning business”.  

“The matter arose prior to SEQ purchasing Libertas and was settled for $0.98 million. This will be recognised as a non-operating expense in 1HFY26,” it added.

“In order to mitigate any potentially similar legacy exposures, the Group has implemented enhanced risk management, compliance monitoring, and adviser supervision frameworks across its Licensee and Advisor Services Division.”

Libertas, which was acquired by Sequoia Financial Group in August 2019, went into liquidation in May 2023. In a statement at the time, Sequoia said it planned to consolidate AFS licences, with management making the decision to transfer Libertas’ operations and customers to InterPrac Financial Planning and Sequoia Wealth Management.

An Australian Financial Complaints Authority determination (AFCA) had previously been made against Libertas on 24 July 2023, but this was not paid by the firm. As a result, the CSLR paid an unspecific amount of compensation to the person on 24 July 2024 and notified ASIC, which prompted the cancellation.

This was the first time that ASIC has cancelled an AFSL following a payment of compensation by the CSLR.

Speaking to ifa in August 2024, Garry Crole, CEO of Sequoia, said the firm’s decision to close Libertas had nothing to do with the CSLR.

“The Libertas AFSL was no longer viable to run, and we wrote to all advisers in February 2023, more than 18 months ago giving them a reasonable notice period the AFSL would be closed in 2023 and if they wished to join another of our AFSL they could do so but under new terms of engagement where the provision of a service was commercial,” Crole said.

“Once all advisers had transferred to a new AFSL and there were no complaints that we believed to be still open we appointed a receiver and asked for the AFSL to be cancelled.”

Complaints against InterPrac have been mounting over financial advisers that it had authorised, including Ferras Merhi and his firm Venture Egg, directing clients into the now collapsed Shield and First Guardian Master Funds.

According to the latest AFCA Datacube release, which has added complaints made during October, AFCA has received 561 complaints between 1 July and 31 October 2025, including 85 just in October.

Despite the firm’s potential exposure, it remained positive about its APAC expansion strategy, which it said is “already gathering significant momentum”, pointing specifically to its corporate finance and salaried advice businesses.  

“This initiative represents a meaningful long-term growth opportunity that will help offset structural challenges in our domestic Licensee and Adviser Services Division,” it said.  

“A full financial update, including finalised impairment values and detailed underlying performance metrics, will be provided with Sequoia’s Half-Year Results in February 2026.”