Sequoia’s Crole brings platforms squarely into frame with ORFR move
ANALYSIS
It was only a matter of time before someone cited the collapse of Trio Capital in 2011 and the eventual remediation of affected members of Australian Prudential Regulation Authority (APRA) regulated superannuation funds in the context of the collapsed Shield and First Guardian funds.
And that is precisely what has occurred via the managing director of Sequoia Financial Group, Gary Crole, who on Thursday confirmed that Sequoia-owned licensee InterPrac Financial Planning had initiated moves to activate the Operational Risk Financial Requirement (ORFR) which sat at the heart of the Trio remediation.
In the interests of perspective, the Trio Capital collapse was once regarded as the largest superannuation fraud in Australian history involving $123 million from two managed investment schemes – the Astarra Strategic Fund and the ARP Growth Fund.
Those losses have already been dwarfed by the Shield and First Guardian collapses.
Putting aside Sequoia’s motivations, activation of an ORFR approach represents a good use of historical precedent to help affected investors in the collapse Shield Master Trust and the First Guard fund but, of course, those who invested via a self-managed superannuation fund (SMSF) should not hold their breaths waiting for help.
Indeed, an organisation calling itself the Victims of Financial Fraud, made up of SMSF investors in Trio Capital as recently as 2022 were still writing to Treasury, complaining about the manner in which they were excluded from the ORFR.
Sequoia’s Crole has clearly done his homework around the workings of an ORFR and its applicability to the Shield and First Guardian collapses and he is also clearly conscious of the fact that they differ from the 2011 Trio situation because the superannuation investments were made via platforms.
He said InterPrac has been in the process of “issuing ORFR activation requests to superannuation trustees which placed the Shield and First Guardian investment suites on their platforms.
“We request that the superannuation trustees immediately declare an ORFR event has occurred, and access their ORFR reserves to remediate every client that has been exposed to these investments. This would benefit every member that has been impacted by investment losses,” his statement said.
It is worth noting that Crole’s announcement of the Sequoia/Interprac ORFR approach noted that, “over the past decade, Australians have increasingly entrusted their superannuation to APRA-regulated platforms such as Netwealth, Macquarie, OneVue and Praemium.
Mr Crole strongly supports these platforms as trusted custodians of Australians’ retirement savings, and believes that the best investment strategy for all Australians should be to engage with a fully qualified financial planner that under law must act in the best interests of their client.
He said that as trustees step up to protect members through mechanisms like the ORFR, it further enhances confidence in the platform and advice market. This aligns with recent calls from major players like Insignia and AMP for trustees to take active roles in remediation efforts.
Mr Crole is fully supportive of ASIC’s enforcement role. He seeks to highlight the protection of ORFR which advisers, AFSL holders and all members rely upon as supporters of the Australian superannuation system. This recognises the integral role which platforms and trustees play in protecting the public against fund failures”,the statement said.
The statement then noted that the grounds for activating an ORFR event are met when either:
- Operational risk failures permit unauthorized actions with insufficient platform safeguards; or
- Due diligence failures allow unsuitable or fraudulent investments onto platforms.
Sounds better than Adviser theft CSLR levies.
Clearly if these other remediation options are not used, then the CSLastR has become CSFirstR.
This bloke needs to start accepting some responsibility for the poor advisers they license and the lack of oversight
This whole saga is a disgrace. Advisers have been dragged through the mud while the real culprits — Macquarie, Equity Trustees, and even ASIC itself — get away untouched. ASIC was warned about Shield back in 2021 and 2022, yet instead of holding the trustees and platforms accountable, they botched the investigation and turned it into a witch hunt against advisers.
Let’s be clear: if Macquarie and Equity Trustees had done their jobs, none of this would have happened. Advisers reasonably relied on the due diligence of platform trustees, on the “Favourable” ratings from SQM Research, and on the audits that gave these funds legitimacy. SPS530 exists for a reason — to make sure trustees safeguard members. That’s where the responsibility lies.
It’s disgusting that hardworking, genuine advisers are being treated as collateral damage. We placed clients in APRA-regulated platforms, not SMSFs, precisely because we believed these were the safest, most protected environments. The service clients were meant to get from trustees was the very thing advisers trusted. To now pretend this was somehow adviser negligence is absurd — it’s a total failure of the gatekeepers who were meant to protect investors.
In what world are the trustees more responsible than Ferhas and crew who set up sales funnels to direct into these funds in a targeted way to line their pockets. Venture egg alone had 500 clients directed there. how is that even possible.
If macquarie and equity trustees did not add them I am 100% confident these thieves would have set up smsf’s to effect the same outcome
take some responsibility, i assume you have some link with interprac
No relationship with Interprac. But your comment is pure speculation…. The fact is SMSFs weren’t recommended. I’m advocating that superannuation platform trustees that were required to conduct due diligence under SPS530 take more responsibility. There is already a law in place that says this.
I’m not sure 100% confidence is warranted and you just may be an over-confident person.
I wonder what the regulators, ATO and APRA are doing to figure out the next attack on the retirement pool. Just like WADA who is always behind the ball with the next drug cheat, the regulators need to get ahead of the game.
You would come up with some piecemeal idea change, continue to enjoy almost zero accountability then demand more funding increases.
Then in another two years time, we’ll reflect and do this all over again because nothing would have changed from an outcomes basis.
How many iterations of this have already been experienced?