InterPrac sale the result of a silent, non-legal squeeze
ANALYSIS
Anyone familiar with the Australian competition legislation and regulatory regime will be more than a little disquieted by the fact that the commercial squeeze applied by most of the investment platforms was more influential on the sale of InterPrac than the efforts of the Australian Securities and Investments Commission (ASIC).
Indeed, what has become increasingly clear in the fall-out from the collapse of the Shield and First Guardian funds is that once ASIC has named particular entities as being the subject of legal action, those entities have thereafter been the subject of exclusionary board room decisions.
While it may be hard to feel sorry for some of the companies impacted by those exclusionary decisions, the reality is that the companies affected are simply the subject of allegations. They have not actually been found guilty in a court of law. Indeed, some may be found innocent of many of the charges levelled by ASIC.
Under Australian law, a defendant is innocent until proven guilty. However, the notoriety generated by ASIC’s actions has seen the defendants being commercially punished before the parties even mount the court house steps.
It is no secret across the financial services industry that not just InterPrac has suffered the closure of access on the part of some clients but also Equity Trustees, Diversa Trustees and research and ratings house, SQM Research.
All of the parties are contesting the charges being levelled at them by ASIC. The regulator is by no means guaranteed clear-cut wins given the complexity of the issues being contested.
It is lost on no-one that some of the boards making exclusionary decisions were, not so long ago, the subject of similar negativity in the aftermath of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Indeed, AMP Limited is still rebuilding its master trust business.
It should also not be forgotten that the Australian Prudential Regulation Authority (APRA) comprehensively lost its Royal Commission-driven case against IOOF Limited (now Insignia Financial) over its use of its operational risk reserve.
Sequoia Financial Group chief executive, Garry Crole yesterday confirmed that the sale of InterPrac for the virtual peppercorn of $50,000 and in his firm’s announcement to the Australian Securities Exchange noted “the increasing platform withdrawals for new business for remaining advisers, despite their not being involved whatsoever with the failures of the Shield and First Guardian funds has had a large bearing on Sequoia’s divestment decision”.
The Sequoia announcement to the ASX on the sale of InterPrac to Conquest noted that “over the past six months, InterPrac has operated in an increasingly complex and adverse environment, including:
- Ongoing industry and regulatory scrutiny associated with matters relating to the Shield and First Guardian investment products
- Uncertainty regarding the allocation of remediation responsibility across participants in the advice, platform and product value chain.
- The withdrawal or restriction of services by a number of platform providers, resulting in a material decline in authorised representatives.
- A transition of the business from profitability to loss-making.
Sequoia has, of course, offloaded InterPrac and is clearly hoping to move beyond Shield and First Guardian via the other elements of its business.
In the meantime, some boardrooms might to like consider that what goes around, comes around.
The first load of pain has already been taken by Macquarie and Netwealth. Let’s not forget that. They were the first ones to move against Interprac and they should know a lot about what actually happened given their exposure to this horrible mess. When you read the concise statement and the statement of claim in ASIC’s action against Interprac you get a good sense of what we are dealing with here. I don’t think that anyone should be jumping in to defend what has happened here. There action is simply impossible to defend.
https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2025-releases/25-274mr-asic-sues-interprac-over-alleged-shield-and-first-guardian-licensee-failures/
Well done to Mike Taylor for saying what no other journalist in this space has had the courage to say.
In a crisis, you need to think clearly and not allow principle to be swept aside by the brush of moral panic. The debanking comparison is perfectly accurate. What has happened here is entirely unprincipled — commercial infrastructure providers have imposed collective punishment on individual advisers who had absolutely nothing to do with the failures of Shield and First Guardian.
Collective punishment is always wrong. No ifs, no buts. Individual advisers who acted properly, who looked after their clients, who had no connection whatsoever to the conduct in question, have had their livelihoods destroyed by boardroom decisions made without due process, without appeal, and without accountability.
Shame on all involved.
Well done again to Mike Taylor for having the clarity and the backbone to call it what it is.
It shows you don’t understand how Licensee’s work. An individual adviser is the representative of the Licensee and if a provider has no faith in the actions of a Licensee they are well within their rights to blacklist the entirity.
Advisers have had years to see the writing on the wall of this stain on our industry and chose to stay representatives of the Licensee so they need to accept all decisions that come with that.
Anyone who thinks that Interpac have been innocent in this has blinkers on.