Australian Financial Complaints Authority issues statement on Sterling Group complaints
AFCA has had issues with a number of cases, where complainants appear to be operating under advice from an external party or advocate.
The Australian Financial Complaints Authority (AFCA) today published a statement regarding Sterling Group complaints.
AFCA notes that this may be a difficult time for many people involved in this matter and that it is working to resolve complaints as quickly as possible. The bulk of complaints relating to the Sterling group of companies were received by AFCA in December 2019 and January 2020 and have been managed within appropriate timeframes, the body explains.
The Authority says that it has had issues with a number of cases, where complainants appear to be operating under advice from an external party or advocate and have received instructions which do not support the resolution of their matter. For example, rather than providing the information required to allow a proper investigation of facts, some complainants are providing standard pro-forma responses, which hamper AFCA’s attempts to resolve the issue, and cause delays.
Several complainants have in recent times withdrawn their complaint from AFCA. This appears to again be due to advice from an external party. The body believes this advice poses a risk to consumers, as it may hamper their access to compensation.
In 2019, the Australian Government announced its plans to establish a compensation scheme of last resort (CSLR), for cases where consumers have a claim, but the firm is insolvent. The scheme has not yet been established, and the Government has not yet announced the final scope of the CSLR, however, there may be a risk that consumers who withdraw their complaint from AFCA may not be able to access this compensation in the future, AFCA warns.
In September 2017, the Australian Securities & Investments Commission (ASIC) announced it had made stop orders on Product Disclosure Statements issued by Theta Asset Management Ltd (Theta) for the Sterling Income Trust (SIT). In June 2019 most of the companies in the Sterling group entered into liquidation. AFCA has received complaints about the SIT against two financial firms that are AFCA members. Those financial firms have been involved in the operation, management and promotion of the SIT and some other Sterling Group investments.
Theta, which is the Responsible Entity for the SIT, has entered into administration. On December 13, 2019, Christopher Darin and Mervyn Kitay of Worrells Solvency & Forensic Accounting were appointed as administrators of Theta.
In January 2020, ASIC advised that the Australian Financial Services Licence (AFSL) of Theta has been suspended until July 21, 2020 because it is under external administration.
In February 2020, AFCA said that, despite the status of its license, Theta remains a current AFCA member.