The peak body for financial advisers is also confused about the new entity that purchased InterPrac Financial Planning.
ASX-listed Sequoia Financial Group announced InterPrac would be sold for $50,000 to Conquest Investment Partners, first revealed by Professional Planner.
Simultaneously an agreement was put in place before the sale to give InterPrac advisers an easier way to transition out of the licensee into AvalonFS.
FAAA chief executive Sarah Abood told members during a webinar the appearance of Conquest came as a surprise.
“We all went and tried to work out who they are,” Abood said.
“They’re not well-known, they don’t seem to have a presence in financial advice. It’s a bit puzzling because the transaction with Avalon seems to be reducing the value of InterPrac, because it’s encouraging those advisers to move to an alternative license.”
Shield and First Guardian investors that received advice via InterPrac Financial Planning have already expressed concern about the capacity for the licensee to pay remediation claims after the sale was announced.
Concerns were raised from Shield and First Guardian investors over the nature of this new entity, which has little available public information, and whether this new structure will be used to avoid paying any liabilities including client remediation either through court action or placing the licensee into voluntary administration.
InterPrac has maintained $7.5 million in cash and $20 million in professional indemnity insurance coverage in the sale.
“The other question we have is, what is the impact on professional indemnity insurance of InterPrac, which we all have an interest in, given it may go to the CSLR,” Abood told members and media during the webinar.
The licensee is being sued by ASIC for due diligence failures relating to authorised representatives Ferras Merhi and Rhys Reilly for their distribution of the Shield and First Guardian funds.
Sequoia managing director Garry Crole has publicly lobbied for platform trustees to utilise their operational risk reserves or ask for government assistance to remediate clients, often arguing they were just as culpable as any other party.
Macquarie and Netwealth both agreed with ASIC to remediate clients to the original starting investment, and both platforms banned new business from InterPrac advisers.
The federal court confirmed on Friday that Macquarie breached the law by failing to place the Shield Master Fund on a watch list for heightened monitoring, a concession made by the wealth giant in the Statement of Agreed Facts as part of the settlement announced last year where it agreed to remediate consumers.
Equity Trustees and Diversa Trustees – the other two platform trustees responsible for onboarding Shield and First Guardian – are in court fighting allegations from ASIC they failed in their oversight responsibilities.
Most major platforms that weren’t caught up in the collapse also banned new business from InterPrac advisers. BT, AMP and CFS announced restrictions on InterPrac advisers earlier this year, while HUB24 ended new business from InterPrac advisers.
Insignia Financial is the only major platform to not act against InterPrac advisers, but it is understood to have full trust in the governance processes it has in place to monitor advisers.
