After last week revealing it would consider settling out of court with clients who lost funds in Westpoint’s failed products, Professional Investment Services (PIS) has deflected responsibility away from advisers and played down any impact on the group.
PIS chief executive officer Robbie Bennetts said there was a “risk with becoming an investor”, and added that financial planning groups could not be expected to accept liability for the performance of investment managers.
“Groups like ourselves can have a look at what the past performance has been and what the manager’s job has been, but we can’t underwrite the performance of the investment,” he said.
Bennetts said PIS advisers had received commissions of around 3 per cent on Westpoint products, compared with an industry average of between 1 and 3 per cent. He said the group had not been told about large promoter’s fees.
“We would suggest that we weren’t given the right information.”
Bennetts said most of the PIS clients who had exposure to Westpoint products were in “positive territory” with their overall portfolios.
“We’re not trying to run away from anything. But the majority of clients are in good shape anyway, so I don’t think they’ve got too much to be aggrieved about,” he said.
Bennetts said he understood two clients of PIS advisers had made complaints to the Financial Industry Complaints Service (FICS), and the lawyers of two other clients had sent letters to the dealer group.
According to reports last week, 23 advisers in the 1,300-member PIS adviser network placed a total of $19.2 million of client funds into Westpoint products.
“We’ll just be looking at every case individually and making sure that if we’ve got a case to answer, then we’ll answer it. And if we haven’t, we’ll defend it,” Bennetts said.
In the immediate aftermath of Westpoint’s collapse, PIS set up a taskforce to deal with any issues to emerge for the group and review the company’s processes.
“As a result of this, a couple of things we’re doing include looking at our exposure to any one manager to make sure it doesn’t get too high, and we’re also having a look at the individual portfolios as the planners lodge them. If it’s outside of what we call a standard asset weighting, we now query the planner as to why.”
Meanwhile IMF, which is bankrolling legal action against advisers who recommended their clients invest in Westpoint, is still no closer to releasing a list of the dealer groups that will be targeted by the action.
“We’re considering each group as they come along and looking at the claims, the value of the claims, and whether they are likely, if they are pursued, to get paid by the planners themselves or their insurance companies,” IMF litigation manager Charlie Gollow said.
