FSCL talks about Ross Asset Management
People were still investing in Ross Asset Management as recently as three weeks before news broke about its missing millions, Financial Services Complaints Limited says
Thursday, November 29th 2012, 11:23PM 
3 Comments
by Susan Edmunds
.Under financial services regulations, all businesses must be covered by an external dispute resolution scheme. Ross Asset Management is covered by FSCL.
The Wellington-based investment firm was placed into receivership this month and there is a gap of $438 million between the amount claimed to be in client accounts and proven assets.
There is little hope of the money being recovered and some investors may have to return payments already made to them.
But FSCL chief executive Susan Taylor says some investors’ money might have been saved had worried investors raised their concerns earlier.
She said people who eventually made complaints to her organisation had been battling for up to nine months to withdraw their funds.
“People are reluctant to complain but if people had come forward earlier, it wouldn’t have prevented the widespread loss but it would have saved those who invested in the last few months.”
Taylor knew of one investor who had put money into the hands of Ross Asset Management just weeks before it went into receivership.
She said she was confident FSCL could not have done more in this case.
“As soon as we got a cluster of complaints on the same issue we let the FMA know. They’d had some complaints themselves and when they heard we were getting them too, they swung into action.”
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While the concept of investors trying for 9 months to get their money out before speaking up is a shocking one, it is mostly an issue of public education. Galling as it is to see DRS's 'advertising' for complaints, it is in fact an important part of their existence. FMA needs to take more of a role here too. All we have had is the cowboy ads, but what about the complaints process we have had to set up and now routinely disclose? Where is their publicity on that?
Not sure where I sit on the idea of merging the DRS's but this story highlights an important point in favour of the idea: if FSCL waited until they had a "cluster" of complaints, and the FMA had their own "cluster" of complaints, and the other 3 DRS schemes sat on their "clusters" how many complaints are swimming in the system before someone takes it up? Are they talking to each other through some sort of database?
I just think regulation needs to be smarter than it currently is i.e. "multiple" gatekeepers to protect the public at large. For all the money now changing hands from advisers pockets are we actually accomplishing anything?
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“As soon as we got a cluster of complaints on the same issue we let the FMA know. They’d had some complaints themselves and when they heard we were getting them too, they swung into action.”
The clouds parted, the sun shone through and all suddenly become clear...
Hearing this afternoon that Ross Asset Management was a member of FSCL has done nothing to increase my confidence that dispute resolution schemes are even “attempting” to vet their participants before they sign them up. First FSCL had the lovely Miss Kerry Buddle (none of the banks would touch her at the time she joined FSCL) and now we have the announcement that Ross was a member of FSCL also. Remember this is the guy who was apparently 2 years in arrears on his company tax returns with only the small sum of $400M+ under management...
I really thought that part of the reason we all had to belong to these dispute resolution schemes was that the “consumer” then had some “basic” confidence that his/her financial adviser or provider was at least reasonably safe to deal with? Currently however its seems that any unethical individual/business etc. can be a member of a dispute resolution scheme and then “perhaps” only then when they go and sign up to the FSP register they might raise some one’s attention. Surely paying money to belong to a dispute resolution scheme with no checks done whatsoever on you as an individual/business is to put it mildly a bloody waste of time. Remember you have to belong to a dispute resolution scheme before you can register as a financial service provider.
I have said this before and I will say it again. Regulation has only primarily been about money changing hands out of adviser’s pockets and into compliance/training organisations coffers with little to no increased protection for the general public. Congratulations New Zealand. We are leading the World in creating bureaucracies that are sold to the public as providing increased protection but in reality actually do sweet fanny all!
If it’s not a requirement currently for dispute resolution schemes to vet prospective and renewing members then the Financial Advisers Act needs to be changed so that it is. I mean golly I am only stating the obvious i.e. the logical thing to do to “try” and take away the potential for something bad to happen is to stop it before it happens in the first place. Dispute Resolution Schemes it would seem have been introduced with the exact opposite in mind. Great for them I am sure but plain “dumb” in the context of what regulation was supposedly all about.
I await the inevitable response from FSCL’s head who will try and tell us all that it’s better to defuse a bomb after it has already gone off.