The consumer lobby has hit out at Centric Wealth’s newest financial planning group for putting clients’ money into failed property lender Bridgecorp.
Until at least 2005, planners from PKF Chartered Accountants and Business Advisers recommended investments in Bridgecorp Finance Limited, according to consumer group Choice.
One investor Choice spoke to said that after advice from a PKF planner he believed he was investing in something that was as safe as government bonds.
“In reality, the investments were high risk,” Choice said.
Yesterday Centric announced it bought PKF’s financial planning division, PKF Financial Services, for an undisclosed sum as it blazes the acquisition trail towards a public listing.
Fourteen PKF employees in Sydney and Brisbane, including three advisers, joined the wealth manager.
Bridgecorp happened in the past and PKF advisers now have access to Centric’s nine in-house researchers, Centric Wealth joint chief executive Michael Pillemer said.
“Going forward [Bridgecorp] won’t affect us,” Pillemer said. “We’ve managed to avoid the recent disasters like Westpoint, Bridgecorp and Basis Capital.”
PKF was Bridgecorp’s independent auditor from 2003 until it went into receivership last month.
The Australian subsidiary of the New Zealand-based Bridgecorp Holdings owes $24 million to around 1000 retail investors.
ASIC stopped Bridgecorp from raising any more money in February 2006 following the company’s large exposure to the failed Westpoint group.
Choice asked PKF how many clients and how much of their money was invested in Bridgecorp and whether any were invested at the time of the collapse.
PKF would not disclose details of individual clients or comment on specific cases.
“PKF’s financial planning practice only advises clients on their investment products based on independent research, provided by third party research companies,” it said.
But Choice said Bridgecorp’s previous auditor had seen the warning signs long before the company went to the wall, citing the resignation of auditing firm Grant Thornton in 2003 because of fears that the company would collapse.
The FPA said had not received any complaints or evidence that financial planners’ clients have been exposed to potential losses from Bridgecorp’s collapse.
