In the past few weeks, ASIC has claimed victory in its investigation into Westpoint after finalising investor compensation arrangements with dealer group Professional Investment Services (PIS) and banning the former chief of Glenhurst Corporation.
The corporate watchdog informed the market on 14 September that it had reached an agreement to settle its initiated Federal Court class action against PIS.
“The proceeding concerns a claim for compensation relating to financial advice given by PIS to clients (group members) to invest in the failed Westpoint Group of companies,” ASIC said in a statement.
“The settlement of the proceeding is subject to the approval of the court.”
Four days later on 18 September, the corporate regulator released a statement declaring the Administrative Appeals Tribunal (AAT) had made a financial services banning order in relation to former Glenhurst Corporation chief Anthony Michael Kofkin.
“Kofkin has been banned for three years from providing financial services and banned for 10 years from holding an Australian financial services licence,” ASIC said.
Despite the intricate details of Kofkin and PIS’s cases not being fully known, the fact it has taken since 2005 until now for certain resolution would not bode well for victims of the 2009 collapse of Storm Financial, Timbercorp and Great Southern.
While it would be unfair to compare the failings of Westpoint with that of Storm Financial, Timbercorp and Great Southern, what appears to be a glaring similarity is that investors in each situation are the true sufferers.
In the case of many Westpoint investors, these ‘victories’ have come too late. Investors who plunged their life savings into the property investments in the early 2000s have faced financial ruin for too long. Some do not expect to receive any form of compensation due to their old age.
For others, the cost of financial failure has proved too great, with many not only losing their money but subsequently their lives.
While Australia’s legal system prizes itself on its search of justice, legal cases can be drawn out into lengthy battles, an advantage for some, though offering only heartbreak for others.
For investors/clients of Storm Financial, the wait for compensation has begun.
While the group’s collapse has sparked an inquiry at the top government level, it is more than six months since its failure and investors are still out of pocket.
Yes, Commonwealth Bank of Australia has formed its resolution scheme, though, by the sounds of things, this is merely a fancy way of forming a list of victims.
Can nothing else be done to help victims of corporate collapse?
A number of advice chiefs have come out in support of dealer groups being required to hold greater capital before being licensed. Is this the way forward?
Much of the past 12 months has been spent on building investor confidence in the financial services sector, though we all have the same emotions attached to money.
If the past 12 months has taught us nothing else, it is that no longer are we fighting to get cash, but fighting now to simply keep it.
