As noted in last week’s column, the future of Great Southern is no longer under a cloud, but is close to being known as the firm has announced its collapse.
McGrathNicol was appointed as joint and several receiver and manager over Great Southern and certain subsidiaries by a syndicate of secured lenders on 18 May.
“We are working with management, regulators and other stakeholders of Great Southern to determine the future of the receivership entities,” McGrathNicol said.
News of Great Southern’s collapse comes less than a month after the group’s major rival, Timbercorp, appointed administrator KordaMentha.
“The administrators are working with the board and management to look at options for the restructure of the company and its financial position,” the group said.
The collapse of Great Southern leaves more than 40,000 clients searching for answers and funding to continue paying off their managed investment scheme (MIS) loans.
While receivers move through their paces with Great Southern and administrators with Timbercorp, it will surely not take too long before investors start to question the advice given by their advisers.
In a move to block any attack on financial planners by investors, the FPA says it intends to investigate the involvement of its members in offering the MIS products as well as the level of authority a product promoter should have in signing off on advice.
In the case of Great Southern, the FPA claims a large portion of advice givers were in fact accountants rather than financial advisers.
“It appears that the majority of advisers promoting these schemes were accountants or people authorised by the product issuers to sell their products,” FPA chief executive Jo-Anne Bloch said.
“This last point is of great concern to the FPA and we will certainly be investigating how product issuers can authorise this activity.”
The blurred line between a financial adviser and an accountant may well emerge as another troubling issue in this instance.
It is perhaps expected that a similar fate is set to befall advisers involved in the collapse of Storm Financial.
If investor confidence took a heavy hit during December and January, the latest collapses will all but shatter interest, despite some in the market doing their best to hint at a resurgence in investments.
It’s only hoped that those greedy enough to make certain mistakes to begin with will either learn from these disasters or be shown up for the shonks they really are.
