Categories
Final Salary/ Defined Benefit

Brite Advisors South Africa Transfer

Summary

It appears that Brite South Africa (Brite SA) has sold/transferred their client bank to a new financial adviser/services firm, named 1.618 Financial services (1.618). This is a transfer of the existing servicing agreements and is not a sale of client funds, or anything along those lines.

The receivers are not privy to any contracts that have been exchanged, and are merely providing a summary of what they know. They are not providing any view on it, and their update is merely designed to help clarify some matters and answer some FAQ.

There are some basic updates they have provided, including:

  • They have not seen any contracts for the sale, nor has there been any contractual agreement made between the 1.618 and Brite Advisors;
  • They will not be providing any updates to 1.618, and will continue to communicate directly with the Trustees and Beneficiaries;
  • Not having a financial adviser will not stop you from receiving updates from the Receivers, as these are made directly to the Trustees and Beneficiaries, and not just the financial adviser;
  • Investment statements provided to Brite clients are not accurate, as they do not reconcile with actual client funds held, and any investment statements provided since the Receivership began can not be relied upon for accuracy;
  • You do not have to utilise 1.618 as your adviser firm, and are free to select another adviser, or continue without one, especially for the time being;
  • Client AUM is still fully under the Receivers control, and this sale/transfer has not done anything to change the custody or control of the funds. This transfer was purely for the servicing of Brite SA clients, as Brite SA will no longer continue as a going concern; and
  • No advisory fees will be deducted from investments by the receiver, as the Receivers do not consider the Court has given them the powers to permit advisory fees to be paid from client AUM.

Our Thoughts

We believe that the key takeaway for Brite SA clients is that they should not feel beholden to move to 1.618 and accept ongoing advice and other services from them, just because Brite SA has transferred your servicing on to them.

If you liked and trusted your adviser at Brite, and they have moved to 1.618, then perhaps staying with them is a good option, but we would certainly recommend you keep your options open and explore what other advisers have to offer.

In the grand scheme of things, this apparent transfer will not have much impact on Brite SA clients, unless they stay with 1.618 and their new/existing adviser assigned to them. There is no obligation to stay with 1.618.

We would also note that many previous Brite SA advisers have taken up positions at other firms, and already solicited their previous clients, so it is clear that not all advisers will be moving to 1.618, and that some clients would have also not followed over to 1.618 already.

What to do now

Again, nothing much has really changed with this announcement, even for those who were clients of Brite SA. Just because the relationship you had has been technically moved over to 1.618, does not mean you have to continue you on with them, and we would, in your shoes, take this as an opportunity to reassess your entire financial planning situation.

Our guidance is the exact same it has been since the start, which is to go through the advice process with several financial advisers, compare their advice/ongoing service, and then choose the one you want to work with going forward, and appoint them as your financial advisor on your existing investment.

That decision won’t be final, and you can always choose another adviser/route down the road, but it will mean you are as far along in the advice process as possible, and right at the front of the proverbial queue, once the funds are released back to the Pension/yourself, to move to another provider/platform.

If you have not done so already, please feel free to book in to speak with one of our advisers on the link below.

Categories
Final Salary/ Defined Benefit

Brite Advisors ASIC – Appointment of Interim Fund Manager

Summary

The Receivers, McGrathNicol, sought, and have received, approval from the Court to appoint a Fund Manager to help manage the assets held on the Platform, whilst the Investigation continues. The main rationale for appointing a Fund manager focuses on the need to manage risks, preserve assets, and to help protect the interests of the beneficiaries.

Since the Platform has been down, client portfolios have been allowed to drift, via natural market movement, from their original weightings, and the Fund manager is there to realign the portfolios, and likely to increase the level of short term instruments held, to reduce the volatility of the portfolios, to help preserve asset values and shield them from large drops, before the funds are ready to be released back to the Beneficiaries.

The Fund Manager is going to take over management of the funds that are in the model portfolios, or at least were supposed to be in the model portfolios (as many Brite clients will have noted, their portfolios do not always match the portfolio they were originally put into, which has complicated the reconciliation process), but there are also many clients who had “bespoke” investments made at their request, and not specifically advised to purchase by a Brite Advisor. These investments will remain, and will not, according to the update, be changed.

Further to this, as confirmed via an update on 5th April, the manager and receiver will not accept or process any instructions on investments from Trustees or Beneficiaries. That is standard for any sort of Administration/Receivership, but the fact that the Receiver has had to release a specific update, is an indication that many clients/advisers are not aware of how Receivership works, nor have read previous statements from the Receiver that such requests will be summarily ignored.

Essentially, the fund manager is going to do two things: rebalance existing model portfolios back to their original weightings, and make sure that any excess cash is reinvested suitably. The Fund Manager will not have Discretionary authority, and all transactions will need to be approved by the Receivers.

Our Thoughts

This is a logical step for the Receivers to make, especially when you take on board how disjointed many client portfolios are, many with excessive cash balances earning minimal interest, all of which means the portfolios are not invested suitably for their beneficiaries risk profile.

Now, many of you who have spoken with Cameron James’ advisers will likely have already heard, or read between the lines, of our rather poor opinion of discretionary fund managers. However, most of that criticism is driven by their high fees and the high fees of the investments they make, not to mention that most of the evidence points to the vast majority of them providing below market returns, especially over any decent time period. However, they have a very limited scope in this situation, and are merely reinvesting back into already chosen model portfolios and/or reinvesting excess cash. The platform also only has access to very low-cost ETF’s, so there are no expensive actively managed funds for them to choose, which is usually where they do their best value destruction.

Whilst it will be important for the Receivers to make sure that the fees charged by the Fund Managers are reasonable, given the hopefully relatively short period of time they will be expected to be advising on the investments, and the limited scope they have, these fees should be not be too high. Although we won’t know just how material they are until they are disclosed, presumably in another update, once the new chosen fund manager has been formally appointed by the court.

What to do now

Again, there is not too much to take away from this announcement. Our guidance is the exact same it has been since the start, which is to go through the advice process with several financial advisers, compare their advice/ongoing service, and then choose the one you want to work with going forward, and appoint them as your financial advisor on your existing investment.

That decision won’t be final, and you can always choose another adviser/route down the road, but it will mean you are as far along in the advice process as possible, and right at the front of the proverbial queue, once the funds are released back to the Pension/yourself, to move to another provider/platform.

If you have not done so already, please feel free to book in to speak with one of our advisers on the link below.

Categories
Final Salary/ Defined Benefit

Brite Advisors USA Assets Segregation

Funds Segregation Summary

Brite Advisers USA (Brite USA) have been steadfast in their belief that Brite USA client funds are segregated from the rest of the Brite assets, and are not included in the funds for which Interactive Brokers have had the margin loans they provided secured upon.

However, the Receivers released an update on 29th February essentially categorically refuting that claim, and reconfirming their opinion that all the Brite funds are commingled, and any claims held over the Platform funds are on an aggregate basis, regardless of which Brite entity or beneficiary that specific accounts funds may be assigned to.

The Receivers are still completing their Client AUM reconciliation, but they have given no indication that they have obtained any documentation or evidence to support the claim that some of the client funds are segregated from the rest, despite many claims made to the contrary.

Whilst there was a new Interactive Brokers (IB) account opened in June 2021, and some of the client funds were indeed transferred, mainly involving Brite USA client funds, this was not a legal separation. There are various reasons given for this, including:

  • IB debt was secured against the entirety of the IB accounts, and this fund was merely effectively a new sub fund, within the same umbrella of funds. The IB debt agreement indicates that the debt is secured against all the accounts, and there is no particular IB account that has any different status;
  • there were already issues with client funds missing when this fund was set up, so the c.10% variance possibly already fully existed prior to the new account being set up;
  • the funds transferred in were not solely Brite USA client assets, as they were transferred from a commingled account that held assets on behalf of beneficiaries located in multiple jurisdictions; and
  • the new account was also held by the Australian entity, Brite Pty, and there was no legal document to indicate that these were segregated from the other accounts.

Our Thoughts

Our opinion has always been the case that it is very unlikely that any of the funds would be segregated from each other, especially given the comments made by the Receivers in regard to the very poor administration and record keeping implemented by Brite Pty.

This could change as the investigation continues, but by all accounts, it appears that any hopes of client funds not being secured on their assets, especially for those with Brite Advisors USA, are disappearing rapidly.

For those of you in the US, this will be disappointing, as Brite Advisors USA have likely filled you with false hope, even if you may have been always sceptical, that the c.10-15% haircut that may apply to client funds would not apply to you, and you were going to receive 100% of your funds back (minus receivership expenses etc). However, this does not appear to be the case, and you are very likely to be in the same boat as all the other non-Brite USA clients.

For those of you outside the US, this is likely comforting news, ironically, as it means that you will not be penalised even further by having to take a considerably larger haircut on your funds to repay the margin loans and the other sources of the missing asset balance.

What to do now

Again, nothing much has really changed with this announcement. Our guidance is the exact same it has been since the start, which is to go through the advice process with several financial advisers, compare their advice/ongoing service, and then choose the one you want to work with going forward, and appoint them as your financial advisor on your existing investment.

That decision won’t be final, and you can always choose another adviser/route down the road, but it will mean you are as far along in the advice process as possible, and right at the front of the proverbial queue, once the funds are released back to the Pension/yourself, to move to another provider/platform.

If you have not done so already, please feel free to book in to speak with one of our advisers on the link below.

Categories
Final Salary/ Defined Benefit

The Hartley Pensions Latest News: Clarity Amidst Uncertainty

Hartley Pension Administration’s complex legal and compliance issues, escalated in 2022, have understandably caused concern among its members and stakeholders. You’re seeking not just updates but meaningful insights on how these developments impact you personally, guiding you from uncertainty to decisive action for your pension’s security and growth. 

This article is dedicated to giving you a clearer overview of the Hartley pension update and what it means for you as a member, featuring insights from Peter Kubik of UHY Hacker Young. 

Key Updates from the Hartley Pension Administration and What They Mean for You

As of February 28, 2024, a crucial update has been issued to all Hartley Pension clients, marking a significant moment in the ongoing administration process. Hartley Pensions Limited, now in administration, has confirmed the receipt of funds from the Financial Services Compensation Scheme (FSCS). These funds are designated for covering the costs associated with the orderly transfer of client SIPPs and assets away from the company. 

This update is more than just procedural; it’s a lifeline for many, ensuring that the transition process won’t be marred by additional financial burdens for clients. This step is part of a  concerted effort to alleviate concerns and provide a smoother path forward for all impacted by the administration phase.

We’ve prepared a dedicated page to provide you with updates on Hartley Pension, including everything you need to know about the latest developments:

Learn more about Hartley Pensions’s update

Financial Support from the FSCS

The Financial Services Compensation Scheme (FSCS) has intervened to provide crucial financial support for Hartley Pension members. This means the costs of transferring SIPPs and assets from Hartley Pensions will be covered by the FSCS. For you, this translates into not having to pay extra for the transfer process, making it easier for you to move your pension without worrying about these additional expenses. It’s a significant step towards easing the financial pressures you might face due to the administration process.

RL360 Hartley Pension Members: A Special Note

Amid recent developments with Hartley Pensions, a notable update has emerged concerning RL360 SIPP members. In coordination with the Financial Conduct Authority (FCA) and Hartley’s administrators, UHY, it’s been clarified that the Financial Services Compensation Scheme (FSCS) compensation extends to RL360 SIPP members. This arrangement facilitates a bulk transfer of these members to IFGL Pensions without a set-up fee. While FS Legal and UHY continue to send general updates, it’s crucial to understand that these do not specifically apply to RL360 SIPP members. Members are advised to await further instructions, indicating no immediate action is required on their part.

Ongoing Annual Management Fees

While the FSCS’s support is a positive development, it’s important to be aware that Hartley Pension clients are still responsible for the annual management fee until their pensions are transferred to a new provider or they exit the company. 

Taking swift action to initiate the transfer of your pension is more than just a procedural step; it’s a financial strategy to safeguard your pension from unnecessary erosion. Each month that passes without initiating the transfer could mean additional fees, diminishing the hard-earned savings you’ve accumulated over the years. 

Simplified Legal Proceedings

The decision by the FSCS to cover Exit and Administration Charges (EAC) means that the complex legal proceedings around these charges are now simplified. For you, this means one less thing to worry about; the potential costs associated with these legal matters will not fall on your shoulders. 

The Part 8 Claim Conclusion on Your Contributions

The recent closure of the Part 8 legal claim signifies a pivotal change, especially concerning the role of Representative Respondents (RRs). To clarify, a Part 8 claim refers to a specific procedure in the UK legal system used for resolving matters that may not involve a substantial dispute of fact, often utilized in administrative and procedural contexts. Representative Respondents (RRs) were appointed to act on behalf of all members in such claims, advocating for collective interests.

With the conclusion of this legal process, it’s important to recognize that the previously anticipated role for RRs—and any financial contributions made towards this effort through FS Legal—has become unnecessary. This development also underscores the need to focus on accurate and current information, directing your attention to trustworthy and official sources such as UHY (the administrators), the Financial Conduct Authority (FCA), and the Financial Services Compensation Scheme (FSCS). 

Future Claim Opportunities and Choosing Representation

Currently, while Hartley is in a default situation, the Financial Services Compensation Scheme (FSCS) is not accepting claims related to matters beyond the costs of the exit strategy. This approach is designed to ensure that all efforts are concentrated on streamlining the transfer process first. 

However, it’s important for you, as a member of Hartley Pension, to know that there will be opportunities in the future to raise claims against the company for issues unrelated to the exit strategy costs. Rest assured, further details on how you can submit these claims will be shared in due time.

We also want to emphasize that engaging a Claims Management Company or a legal representative to make a claim to the FSCS, especially after the complications faced by Hartley Pension in July 2022, is entirely optional.

To best prepare for these upcoming claim opportunities, it’s beneficial to start gathering all relevant documentation and records related to your pension. This might include statements, correspondence with Hartley Pensions, and any records of financial transactions or decisions that could support your claim. 

While hiring a Claims Management Company or a legal representative remains an option, considering direct submissions to the FSCS remains open. This approach not only simplifies the process but also helps avoid potential additional costs associated with third-party services. Further detailed guidance on these future claims will be shared as it becomes available, ensuring you’re well-informed and ready to act when the time comes.

Moving Forward

The recent updates in the administration of Hartley Pensions signal progress in addressing the challenges you face as a member.  While the path ahead may still hold uncertainties, the financial support from the FSCS and the simplification of legal proceedings, including those initiated by UHY Hacker Young LLP as joint administrators, are positive steps towards regaining stability. As you consider your next moves, remember the importance of timely action to minimise any further impact on your pension savings.

What You Can Do Now

We understand that you are in “crisis” mode, facing what seems like an unending process. You might have opened up discussions with representatives to clarify the situation and started conducting due diligence to place your trust in managing and guiding you through this crisis.

We also understand that you want to regain control of your pension funds in a short time. However, with the “time is of the essence” mindset, placing your trust in someone without proper due diligence can absolutely lead you to a costly mistake.

As an independent financial advisory firm with an extensive, proven track record in handling financial crises, we offer some accountable advice for you to chart a course through these challenging times.

Stay Informed, But Choose Your Sources Wisely

In an era where information is abundant yet not always accurate, discerning the reliability of your sources becomes paramount, especially when dealing with something as critical as your pension. Official communications from UHY Hacker Young, the FCA, and the FSCS represent the most verified information in the financial updates.

Alongside that, to give you another point of view, just rely on the regulated, proven track record of experiences and have a transparent testimonial both online and offline, like Cameron James. 

At Cameron James, our approach is to cut through the noise, providing clear, strategic advice based on advanced cash flow modelling to secure your pension investment.

These entities are not just arbitrary choices; they are established authorities tasked with oversight, protection, and guidance within the financial sector. Their updates offer clarity, fact-checked information, and directives that are essential for making informed decisions. By prioritising these sources, you ensure that your decisions are based on solid ground, shielding yourself from the misinformation that can lead to costly mistakes.

Protect Yourself From Scams

With scammers becoming increasingly sophisticated, protecting yourself from fraud has never been more crucial. Scams thrive on uncertainty and fear, making it essential to verify the legitimacy of any financial advice or offers you receive. Legitimate financial advisors do not typically use cold calling as a method to gain new clients due to the high risk of misinformation and fraud associated with such tactics. Always take the time to thoroughly research and confirm the credentials of any financial advisor or service before making any decisions. This diligence ensures you engage with trustworthy professionals and safeguard your financial future against potential scams.

Our CEO and IFA Dominic James Murray offers tips on performing your due diligence before trusting a new financial advisor. Avoid making the mistake of dealing with someone who isn’t upfront about fees. In this video, Dominic outlines essential questions to ask an Independent Financial Advisor (IFA). Watch the video for guidance on choosing a financial advisor.

 

Consider Your Next Steps

Considering your next steps involves assessing how your pension can better serve your future financial goals, especially once current challenges are resolved. This is an opportunity to revisit your investment strategy, explore diversification options, and perhaps reassess your risk tolerance. Engaging with a financial advisor can help in crafting a tailored plan that not only aims to recover any losses but also positions your pension for growth. It’s about shifting focus from immediate concerns to long-term financial health and readiness for retirement.

Planning is not just about waiting for the storm to pass but about actively shaping the future of your pension. This moment presents a unique opportunity to reassess your financial goals and strategies. Ask yourself: How can my pension better align with my long-term objectives? This is the time to explore new investment strategies, consider diversification, and adjust your risk tolerance to ensure your pension is working as hard as it can for your future. Engaging with a financial advisor could offer personalized insights and strategies tailored to your unique situation, helping to turn these uncertain times into a springboard for growth and security.

Our Commitment to You

It’s time to reflect and take decisive steps forward. At Cameron James Finance, we understand the emotional and financial toll this situation has taken on you. It’s not just about recovering losses; it’s about reclaiming your future and peace of mind.

At Cameron James, we are committed to providing transparent, insightful, and actionable advice. Our aim is not only to guide you through the current Hartley Pension administration but also to ensure your financial strategy is robust and aligned with your long-term goals. We encourage you to book an initial consultation with us to discuss how we can support you in gaining clarity and control over your financial future.

Book your free initial appointment with one of our senior advisors today.

Categories
Final Salary/ Defined Benefit

Hartley Pensions in Administration: All You Need to Know

Key Takeaways:

  1. Hartley Pensions Administration: Hartley Pensions has entered administration, impacting around 17,000 savers. This highlights vulnerabilities in the UK pension system and risks with specific investment strategies.
  2. Impact on Savers: We know your transfers have been blocked and your retirement plans disrupted.
  3. Regulatory Intervention: The FCA stepped in over issues at Hartley Pensions and UHY Hacker Young LLP were appointed as administrators to manage this crisis in clients’ interests.
  4. UHY Hacker Young LLP’s Role: The administrators are focused on an orderly wind-down whilst managing day to day operations including compliance, asset management, claims etc.
  5. Legal and Advocacy Efforts: Lawyers (FS Legal Solicitors) advocated for expanded compensation around exit charges – and succeeded with the FSCS.
  6. FSCS’s Evolving Stance: In a positive move, the FSCS agreed to cover Exit and Administration Charges to offer more comprehensive cover for pension holders.
  7. Future Court Rulings: A February 2024 ruling aims to finalise charge terms, transfers are expected from April. There’s light ahead.

 

Hartley Pensions in Administration: Savers Face Charges as a UK Pensions Industry Giant Stumbles

Hartley Pensions has played an important role as an operator and manager of SIPPs and SSASs in the UK. As an independent entity, Hartley is responsible for holding assets within clients’ pension funds in trust.

The issues facing Hartley Pensions have placed many SIPP holders in a difficult position. We appreciate this may be causing anxiety about retirement plans and financial security.

Around 17,000 clients are affected by operational problems preventing asset transfers from Hartley for an extended time. We understand blocking transfers impacts your access to savings.

The situation does highlight certain vulnerabilities in parts of the UK pensions framework, as well as potential risks with some investment strategies. However, efforts are being made to address the administrative issues and bring more stability.

We aim to have open conversations about what has transpired with Hartley. Our goal is to provide clarity personalised to your retirement planning situation. By working together, we can review your specific options going forward.

 

What Happened at Hartley Pensions?

Hartley Pensions encountered severe regulatory and operational challenges that led the Financial Conduct Authority (FCA) to mandate improvements to prevent further investment issues. The goal was to address problems and protect clients’ interests. However, financial difficulties escalated despite best efforts.

Appointment of Administrators

By July 2022, Hartley’s director concluded after seeking professional advice that insolvency was likely imminent. Consequently, Peter Kubik and Brian Johnson of UHY Hacker Young were appointed administrators to oversee winding down operations.

Onset of Administration

The FCA intervention left Hartley Pensions in a precarious financial position, eventually necessitating administration. This introduced complexities around potential fees and accessibility of savings for pension holders.

Charges and Uncertainty for Savers

Administering pensions involves legal and operational steps to stabilise schemes. Unfortunately, this opened the possibility of exit and administration charges for savers seeking transfers. The specifics can vary based on case complexity, demanding financial prudence.

 

The Administrators’ Pivotal Role

As joint administrators, Peter Kubik and Brian Johnson of UHY Hacker Young play a crucial role in addressing Hartley’s financial distress. Their key responsibilities include:

  1. Statutory Compliance and Planning: Ensuring orderly legal processes like notifying creditors, maintaining records, and reporting as required. This establishes transparency.
  2. Asset Management and Realisation: Identifying, securing, valuing and selling company assets aims to maximise returns to creditors.
  3. Creditors’ Claims and Distributions: Adjudicating claims fairly and distributing repayments by strict rules brings orderliness.
  4. Investigations: Uncovering any inappropriate company actions protects pension holders interests.
  5. Trading: Facilitating smooth wind-down of operations by handling business activities and obligations.
  6. Legal and Ethical Considerations: Acting ethically and legally by avoiding conflicts of interest and seeking court approval.
  7. Communication and Reporting: Providing transparency through regular progress reports to stakeholders.
  8. Conclusion of Administration: Charting the optimal exit strategy with pension holders best interests in focus.

As administrators without personal liability, their prudent navigation of complexities is essential for stabilisation. Their oversight of assets also helps reassure pension holders during this challenging period.

 

Hartley Pensions Timeline

This infographic summarises major events leading to Hartley Pensions entering administration.

An infographic timeline detailing key events for Hartley Pension. Key milestones include acquisitions of various SIPP providers from April 2018 to January 2020, partnering with Ardan International in March 2021, entering administration in July 2022, hiring FS Legal Solicitors in October 2023, addressing liquidation fears in November 2023, proposing exit charges in December 2023, and starting compensation payments in February 2024. The timeline alternates between blue and yellow banners indicating each significant event leading to Hartley Pensions in Administration.

Legal Milestones and Advocacy

Critical Developments

The administration journey has involved pivotal legal actions. UHY’s initial efforts to find a buyer for Hartley’s client assets were unsuccessful, leading to blocked transfers that left you stuck. Significantly, UHY sought court approval to impose Exit and Administration Charges (EAC) – a proposal that sparked debate.

The Role of FS Legal

Client representatives appointed FS Legal Solicitors to advise on proposed cost models and court processes. Their financial services law expertise aids advocacy efforts – as shown in other creditor committees they have been involved in.

FS Legal established a client portal to enable communication with you and gather your feedback, despite restrictions on contributions/transfers. You can still draw down funds and trade investments.

Importantly, FS Legal advocated for expanded FSCS compensation beyond just administration fees to cover additional costs incurred by you. This push succeeded – the FSCS agreed to cover EAC.

FSCS’s Evolving Stance

The FSCS deciding to cap EAC marked increased pension holder protection by covering your transfer costs during administration.

 

What Could This Mean For Your Retirement Planning?

The saga of Hartley Pensions entering administration has unfolded over several years, impacting thousands of investors across the UK. While UK investors benefit from protective measures established by regulatory bodies, this situation serves as a crucial reminder of the importance of conducting thorough due diligence on both financial advisers and their recommended investment products.

The prolonged period of uncertainty has understandably caused distress among pension holders. However, there is hope on the horizon, with the pivotal court ruling expected to be finalised on March 1st, 2024. This decision is anticipated to bring much-needed clarity and resolution to those affected.

Reflecting on this ordeal, it becomes evident that such challenges, while daunting, also present an invaluable opportunity for introspection and strategic realignment. This juncture is ideal for investors to reevaluate not only their pension assets but their entire financial landscape. It’s an opportune moment to recalibrate your financial strategy, ensuring it is robust, resilient, and aligned with your long-term objectives.

As a financial advisory firm, we cannot stress enough the importance of using this experience as a catalyst for a comprehensive review of your financial health. It’s a time to reinforce your financial foundation, ensuring your strategy is not only sound but also adaptable to the evolving financial environment. This approach will not only safeguard your assets but also position you for a more secure financial future.

 

Our Recommendation

Given the complexity of recent events, we advise you to speak to a regulated financial advisor. Getting personal advice can provide security during uncertain times and help you to:

  • Stay informed on industry changes and how your retirement planning could be impacted. Check for regular updates from administrators and regulators as another trusted information source.
  • Understand what protections are available for your assets if issues arise. Watch our YouTube video below for advice on partnering with an advisor to safeguard your retirement.

  • Knowledge and preparation with ongoing support are essential to navigate these kinds of pension complexities. Let us help guide you through uncertainties, explain protection options, and keep your retirement planning on track.

 

Confident Retirement Planning Ahead

The Hartley Pensions situation has undoubtedly highlighted the intricacies involved in pension planning. Yet with complexity comes opportunity – the opportunity to forge a stronger, more trusting financial advisory relationship focused on your needs.

At Cameron James, we reject transactional engagements, instead nurturing long-lasting partnerships. You deserve more than the bare minimum service. We provide robust support, extensive market insights tailored to your goals, and guidance to navigate uncertainties like those in the Hartley crisis confidently.

Financial planning is a journey – one too important to travel without an expert companion you connect with. We sincerely care about helping secure the retirement lifestyle you envision. Our commitment is to you.

We invite you to book a free initial consultation with one of our regulated financial advisors. This pressure-free meeting lets us hear your retirement aspirations, understand your priorities, answer your questions and explore aligning our services with your outlook.

Categories
Final Salary/ Defined Benefit

Brite Advisors Receivership: Report Update

 

The receivers, Linda Smith and Rob Kirman, provided an update on February 1st about their efforts with Brite Advisors Pty Ltd since being appointed in December. They are working through some tricky issues as they try to follow the Federal Court’s orders to secure Brite’s assets.

This receivership has illuminated some complex arrangements in place, but Linda and Rob are focused on protecting the company’s remaining value as best they can while complying with the court mandates.

Their latest report highlights the progress made so far. We’ll have to stay tuned for additional updates from the receivers down the road as this process moves forward. You can refer to this article for the overview of the process regarding Brite Advisors.

 

Asset Management and Variance Findings

In their initial report to the Court as Investigative Accountants on December 8th, 2023, the Receivers highlighted some important discoveries about Brite Advisors:

  • There was a significant $69.1 million discrepancy between the Client Assets Under Management (Client AuM) reported on the Brite Salesforce platform and the verified Client AuM as of November 9th. This c.10% variance underscores weaknesses in Brite’s asset management practices.
  • The investigation revealed that due to the commingled structure of the four Interactive Brokers Australia (IBA) accounts, this variance cannot be tied to any specific group of Beneficiaries or jurisdiction.
  • All IBA accounts were maintained in an omnibus format under Brite Advisors, indicating a lack of segregation within each account.

The commingled nature of the accounts and the omnibus structure without segmentation represent challenges in tracing assets back to underlying beneficiaries. The $69.1 million dollar gap highlights flaws in Brite’s asset management and reporting processes that the Receivers are still working to unravel.

There was some speculation that some of this amount might have been recovered, given the lack of reference in the last update from the Receivers, but that hope seems to have been misplaced. Of course, as they complete their reconciliation process, it might end up being the case that this figure is incorrect, and that the discrepancy is actually materially different, but all we have is this information, so a c.10% loss is a baseline we are expecting, attributable to account discrepancies.

 

Return of Funds from Interactive Brokers Hong Kong

During the timeframe from June to November 2023, Brite Advisors executed a significant operation involving the divestment and transfer of approximately AU$129 million in Client Assets Under Management (AuM).

This sum was moved from the company’s Interactive Brokers Australia (IBA) accounts into a cash position. It was subsequently transferred to an HSBC account in Hong Kong, which was held under the name of Brite Hong Kong Limited (Brite HK).

Following the issuance of court orders on 24 November 2023, a directive was given for these funds to be repatriated to Brite Advisors’ IBA accounts. By December 2023, a substantial portion of these funds, amounting to AU$115.8 million, was successfully returned. This sum is currently maintained in accounts under the Receivers’ control.

However, the Receivers have noted an ongoing investigation into the complete accounting of the Client AuM during its tenure with Brite HK. This is because the Directors have yet to provide a comprehensive account of these funds.

Again, this highlights the perplexing nature of the Brite arrangements, and such a large transfer of client assets, especially in the middle of an investigation/whispers of client asset issues, is particularly troubling. Hopefully the whereabouts of the unreturned funds is resolved, and the missing amounts recovered, but if we presume that it is yet more money that won’t be recovered, that brings the total client assets “under threat” to c.$77.5m USD, which is c.11% of client assets.

 

Investigations into Related Party Transactions

The Receivers’ ongoing investigations have uncovered that approximately $91.4 million in net funds have been channelled to various related parties of Brite Advisors since the fiscal year (FY) 2016. This scrutiny is part of a broader examination into the financial dealings of Brite Advisors.

It focuses particularly on the flow of funds from the company’s Interactive Brokers Australia (IBA) accounts into its Westpac operating accounts. From there, the funds were subsequently disbursed to these related entities.

The critical aspect under review by the Receivers is the nature of these payments to related entities. Specifically, they are questioning the legal and ethical basis of such disbursements.

This includes an in-depth analysis to ascertain whether these related entities were rightfully entitled to receive the payments. Additionally, they are examining if any of these funds were utilised to finance the acquisition of subsidiaries within the broader Brite group.

We don’t know where these transactions fit in with regard to the client fund discrepancies, but it isn’t a huge jump to assume they are connected, and that a lot of the missing client assets are attributable to these related party transactions. Again, this also highlights the risks involved with vertically integrated financial services providers, as there aren’t independent 3rd parties involved, so the level of transparency just isn’t there.

 

Interactive Brokers Credit Facility Review

The Receivers have conducted a detailed examination of the Interactive Brokers (IB) Credit Facility, notably highlighting that Brite Advisors, serving as a guarantor, facilitated a significant financial transaction on 14 December 2020. This transaction involved a partial repayment amounting to US$5 million towards the US$10 million IB Credit Facility, with Brite Advisory Group Limited (BAG) being the principal borrower.

Furthermore, the investigation revealed that Brite Advisors’ accounts were utilised to settle interest payments totalling US$1.4 million related to this credit facility.

This focused review of the IB Credit Facility is instrumental in evaluating the strategic financial decisions impacting Brite Advisors’ liquidity and overarching financial health. The Receivers’ efforts to dissect the terms, utilisation, and consequent financial implications of this credit facility are pivotal in understanding its influence on the financial stability of Brite Advisors.

This update did little to confirm the amount outstanding on the margin facility, and as we know this was backed against client funds, this is particularly disappointing. It does appear that the credit facility has shrunk significantly since some of the disclosures made in the SEC charging document, but it can’t be certain how this interacts with the missing client cash mentioned above, and we can only wait to see what the Receivers have to say in their next announcement for, hopefully, a more thoroughly explained status update

 

Acquisitions and Strategic Investments Analysis

The Receivers have conducted a thorough review of various acquisitions undertaken by entities within the Brite Group since 2018. Through their detailed investigations, it has come to light that for at least 10 significant acquisitions, there is a suspicion that the payments were either fully or partially financed using Client Assets Under Management (AuM) or by leveraging these assets as security for borrowed funds.

The Receivers are now meticulously assessing whether there are any grounds for Brite Advisors and/or the underlying Beneficiaries to lodge claims concerning these acquisitions. This indicates a deep dive into the legality and appropriateness of using client assets in such a manner.

In addition to these acquisition-related inquiries, the Receivers have expanded their investigation scope to include property assets. Specifically, they have identified 59 over-the-counter (OTC) assets listed in AutoRek, that were not held in Interactive Brokers Australia (IBA) accounts.

The process of engaging with various third parties to ascertain the relevance and ownership of these assets is underway. This step is crucial in determining whether any of these assets fall within the scope of the Receivers’ appointment and responsibilities.

Further complicating matters is the intricate web of financial and asset management practices within the Brite Group. Mapping out this complex landscape remains an ongoing effort as the Receivers continue their extensive investigations.

This development only further complicates matters and indicates just how big a task the Receivers have ahead of them to unwind this murky web, and repatriate clients with as much of their hard earnings savings and pensions as possible. It may very well be the case that further lawsuits/class actions need to be taken in the future to recover as much of the missing funds as possible, as the Australian courts may lack the capability/authority to obtain the assets themselves, but this all remains to be seen.

 

Proceedings Update

The Receivers are committed to maintaining open lines of communication with Corporate Trustees and beneficiaries throughout the duration of the Receivership. They pledge to provide timely updates on the conduct of the Receivership and to disseminate further correspondence as new material developments arise.

For ease of access and to ensure stakeholders are well-informed, all correspondence issued to stakeholders will be made available for download from the McGrath Nicol website, specifically at the dedicated Brite Advisors section.

At Cameron James, we will also continue to review the status updates, and attempt to distil them into more decipherable (read: shorter and less jargon filled) articles.

 

ASIC’s Application for Company Wind-Up

In line with the directives set out in the Court Orders, the Receivers submitted their detailed report to the Court on 24 January 2024. This action was closely followed by a significant move from the Australian Securities and Investments Commission (ASIC), which, on 22 January 2024, formally applied to the Court for the wind-up of Brite Advisors.

This application by ASIC highlights the regulatory body’s growing concerns over the financial management and compliance practices within Brite Advisors, signalling a critical phase in the legal proceedings surrounding the company.

 

Legal Proceedings and Client Impact

The Receivers’ Report to the Court on 24 January 2024, alongside ASIC’s application to wind up Brite Advisors on 22 January 2024, marks a pivotal moment in the ongoing legal proceedings.

The scheduled court hearing on 6 February 2024, at 9am (AWST), is set to be a decisive event that could shape the future of Brite Advisors, potentially leading to its liquidation and the appointment of a liquidator.

This hearing, which will be conducted virtually and is open to the public, underscores the importance of transparency in these proceedings.

On 6 February 2024, Mcgrath Nicol transitioned into a dual role where they were appointed both as Liquidators of Brite Advisors and as Receivers and Managers of the trust assets. This significant development, driven by ASIC’s application, is pivotal in ensuring the integrity and equitable treatment of all stakeholders within the liquidation process.

 

Appointment of Liquidators: McGrathNicol’s Role

The appointment of Linda Smith and Rob Kirman as joint and several Liquidators and Receivers on 6 February 2024, following the Federal Court’s decision, marks a critical step in managing Brite Advisors’ affairs.

Their responsibilities include winding up Brite Advisors’ operations and managing client assets under management (AuM), under the continued asset preservation orders obtained by ASIC. This ensures that the liquidation process and the management of trust assets are handled with the utmost diligence and transparency.

They must also ensure that all legal and financial obligations are met. Their appointment follows their previous roles as investigative accountants, providing them with in-depth knowledge of Brite Advisors’ financial situation.

 

Regulatory Actions and Responses

In response to the unfolding situation at Brite Advisors, regulatory bodies, spearheaded by ASIC, have taken decisive steps, including the filing of a wind-up application. These actions reflect deep concerns over the company’s financial management and compliance practices.

The regulatory responses aim to safeguard client interests and preserve the integrity of the financial advisory sector. For Brite Advisors’ clients and stakeholders, these developments are a reminder of the critical role regulatory bodies play in maintaining stability and trust within the industry.

 

Our Thoughts

We have provided individual commentary/opinion under many of the headings above, but our overall message has not changed much, even given the rather significant updates above.

What we are saying to Brite clients who get in touch with us is rather universal, which is mainly to set expectations. This process is unlikely to be resolved any time soon, and there is likely to be a rather significant “haircut” to the amount you will have available to transfer out, with a best case scenario looking like c.10%, and the worst case closer to 20%, but these figures are very much subject to change, as more updates from the Receivers are received.

Our guidance is the same as it has been since the Brite situation first came to light, which is to actively engage in the regulated financial advice process with a locally regulated financial adviser. An adviser you have thoroughly performed due diligence on (and perhaps several advisers), who you trust (tough we know given you are likely very distrusting of advisers given your experience with them), and hopefully get yourself into a position where once the funds are released by the Receivers, you are all guns blazing ready to go, to get yourself into a more suitable pension wrapper/investment platform and start obtaining “proper” financial planning and advice.

 

 

The last thing you want is to be trying to obtain advice at the last minute, having not done thorough due diligence, as the chances of you making a mistake and utilising the services of an inferior/unscrupulous adviser are likely to drastically increase. You want to get ahead of it, and be thoroughly well planned and ready to go, as soon as you are able to do so.

You will also likely find that if you choose a good financial adviser, there are many other parts of your financial situation that can be looked at and improved whilst you wait, as has been the case with many of the clients we have engaged with, where we are already helping them with their non-UK assets and doing financial planning and cashflow modelling with them.

Categories
Final Salary/ Defined Benefit

Lifetime Allowance (LTA) Abolishment and What You Need To Know About The Autumn Statement Pension Reform 2023

The Autumn Statement unveiled big changes that will impact your finances. Chancellor Jeremy Hunt announces reforms to the Lifetime Allowance, Lump Sum Death Benefit, and Overseas Transfer Charge. These could really affect your retirement and inheritance plans.

We want to help you understand what it all means. The Lifetime Allowance (LTA) limits how much you can save into pensions without extra tax, also known as the LTA Charge. The reforms mean you can save more into your pension going forward. The Lump Sum Death Benefit rules around how much your pension can pay out when you die. The changes give less flexibility here. And the Overseas Transfer Charge makes moving your pension abroad costlier.

Understanding the Changes

Lifetime Allowance (LTA) Abolition

The Lifetime Allowance sets limits on your pension savings before you incurred extra taxes. Removing this cap gives you more pension flexibility but also means you must take charge of investment and tax planning in your retirement strategy.

Abolishing the Lifetime Allowance eliminates a significant barrier that many pension investors encountered, particularly high earners. While this provides greater freedom in your pension decision-making, it simultaneously transfers more accountability to you for weighing investment choices and potential long-term tax implications when mapping your overall retirement approach. You may need to review your investing risk appetite and tax picture thoroughly.

 


Lump Sum Death Benefit Allowance

The introduction of the Lump Sum Death Benefit Allowance presents a noteworthy change in how we treat death benefits from pensions. This £1,073,100 allowance gives you a clear tax-free benchmark when passing on your pension savings to loved ones after you die.

Any death benefits paid to your beneficiaries up to this amount will not face taxation. This provides helpful clarity for your estate planning needs.

However, for death benefits exceeding this allowance, the tax implications for your beneficiaries become more complicated. They will face income tax charges on any amounts over £1,073,100, potentially leading to substantial tax bills, depending on the final value of your pension and their personal tax circumstances.

This change means you need a more strategic approach when planning how to pass on your pension savings tax efficiently. We encourage you to consider how you distribute any amount over the Lump Sum Death Benefit Allowance within the context of your broader estate and inheritance tax planning aims.

Speaking to a financial adviser can help make sense of the options available to handle the tax treatment of any substantial pension assets in excess of the threshold.

Introduction of Lump Sum Allowance

Alongside the abolition of the LTA, the Autumn Statement introduced a new Lump Sum Allowance of £268,275, which is 25% of the previous LTA. This allowance sets a cap on the Pension Commencement Lump Sum (PCLS) that can be taken tax-free.

While this provides clarity on the tax-free portion of pension withdrawals, it also imposes a new limit that individuals must consider in their retirement planning. This change is particularly relevant for those who have not yet accessed their pension funds and may need to adjust their withdrawal strategies to optimise tax efficiency.

For those with substantial pension savings, careful planning is required to structure withdrawals in a way that maximises the tax-free PCLS available under the new allowance. Exceeding the £268,275 threshold will lead to tax charges that reduce overall retirement income.

Overseas Transfer Charge (OTC)

A notable change for those thinking of transferring UK pensions overseas is the new Overseas Transfer Charge (OTC). This 25% tax charge applies to transfers above the £1,073,100 Overseas Transfer Amount.

This OTA level mirrors the Lump Sum Death Benefit Allowance. For those with a protected higher Lifetime Allowance, that figure would apply instead.

This change introduces a substantial extra tax consideration for assessing whether moving your pension pots abroad aligns with your retirement plans or not. Carefully weighing up the pros and cons is vital to make the right choice, and thus you should always seek the help of a regulated and qualified financial adviser to understand your options.

Specific Implications for QROPS and SIPP

Transfers to QROPS

The timing of transfers to Qualifying Recognised Overseas Pension Schemes (QROPS) takes on greater significance given these rule changes.

If you transfer before 5th April 2024, there would be no Lifetime Allowance tax charge triggered. However, for QROPS transfers after 6th April 2024, although the Lifetime Allowance does not apply, any amount over £1.073 million would face the 25% Overseas Transfer Charge.

Additionally, under current guidelines, moving funds over 10 years ago falls outside the UK tax charge rules. This provides helpful clarity on legacy transfers.

We recommend reviewing transfer plans in advance of April 2024 to map out the most strategic approach aligned with your situation. Getting ahead of the deadline enables us to support you in mitigating any potential tax implications.

Remaining in a Current SIPP

For those opting to stay in their Self-Invested Personal Pension (SIPP), the Lifetime Allowance abolition changes things. Past withdrawals no longer have Lifetime Allowance charges to consider. This covers areas like Pension Commencement Lump Sums, setting up income, death benefits, and age 75 tests.

However, the Pension Commencement Lump Sum still has a £268,275 cap. Any excess over this amount would face income tax charges. Lump sum death benefits also have a £1.073 million threshold before beneficiaries pay income tax on any excess at their marginal rate.

There is an exception on death before age 75 – beneficiaries can take any excess as income without an immediate tax charge. Even so, remaining in a UK pension means potential future legislation changes could still alter access rules and tax treatments, especially if governments change. 

The Role of a Financial Advisor

Financial advisers have an important role in making sense of this pension complexity for clients.

We can offer tailored guidance on how transferring overseas or staying put could align with your objectives. Our analysis will factor in the new rules and your unique financial and retirement planning aims.

Informed choices matter given the substantial tax implications in play. We will discuss pros and cons in detail before you commit one way or another.

Our support also extends to strategic planning around contributions, inheritance, and calculating tax efficient income drawdown. We keep you updated on regulatory developments and what they mean for your situation.

The financial landscape continually evolves, so having first-hand advice ensures you can adapt plans accordingly. We provide ongoing assessments to keep your arrangements on track through personal or policy changes ahead.

Our aim is equipping you with the knowledge to pursue the pension approach that works best for your circumstances.

To Sum Up

The Autumn Reform 2023 introduces noteworthy changes to the UK financial environment. Areas impacted include the Lifetime Allowance, Lump Sum Death Benefits and the Overseas Transfer Charge.

These reforms provide openings along with complexities. This increases the need for professional financial advice to steer through the changes smoothly.

With our pension expertise and individual guidance, you can effectively navigate the new rules. We will collaborate on robust arrangements tax-efficiently aligned with your long term aims.

As the financial landscape inevitably continues shifting, first-hand advice is crucial to stay informed. We will explain the meaning of policy and regulatory updates on your position as they emerge.

Our support empowers you to adapt as the environment evolves. By working together, we will ensure your financial plans remain on track to deliver your retirement goals.

Book a free initial consultation with one of our Independent Financial Advisers to discuss your pension planning further.

Categories
Final Salary/ Defined Benefit

Understanding Withdrawal Protocols for Your Brite Advisors Pension or General Investment Account: A Guide

There’s important news for Brite Advisors’ clients regarding their pension or Investment Account. At Cameron James, we want to make sure you’re up-to-date with these changes. For more context, be sure to read our previous blog.

Understanding the New Withdrawal Process

Following the appointment of McGrathNicol as Corporate Receivers, Brite Advisors has established specific protocols for processing withdrawal requests. These include:

  • Submitting requests through Corporate Trustees, where such arrangements exist.
  • Direct investors without Corporate Trustees must send their requests via email to a designated address.
  • Only those who had submitted requests prior to November 9th i.e., those who were actively already drawing from their pension, are able to access their funds at this point in time, and requests made after this date will not be considered
  • Withdrawals are limited to maintaining at least 70% of the total investment value as of 9th of November 2023. I.e., you can withdraw a maximum of 30% of the value you had on the 9th of November.
  • Complete withdrawal or surrender of investments is not currently permitted under these new guidelines.

Request Submission and Processing

For those with pension schemes, continue to liaise with your usual scheme administrators for withdrawal requests. Direct investors with Brite Advisors should adhere to the new email process. The Receivers are diligently working to gain access to necessary systems and anticipate beginning the processing of qualifying requests in the upcoming weeks.

Whilst the Receivers’ official announcements don’t explicitly state this, we have seen correspondence from pension trustees indicating that it may actually be possible to submit a request after the 9th of November cut off, and get the withdrawal approved, but there will need to a bulletproof reason for doing so, such as financial hardship without it.

The statement received from the Trustee was that “requests made after 9th November will require special consideration by the Receivers and must be accompanied by an explanatory memorandum, perhaps describing the purpose of the withdrawal and the hardship that may ensue if the request is not acceded to, which must be duly signed by the requesting member.”

Please note, this option should only be considered under genuine circumstances. Be aware that any requests for full withdrawal or similar actions are likely to be rejected.

The Broader Impact on Investors

These recent changes have significant implications for a wide range of investors, affecting both short-term liquidity and long-term financial planning. It’s crucial for investors to reassess their strategies and possibly adjust their financial plans in light of these new withdrawal protocols.

Our Opinion

These updates from Brite Advisors are significant, and after many weeks of confusion and speculation around when members would be able to start drawing again from their pensions, it finally appears like there is movement.

Whilst this may feel like an opportunity to secure some of your funds and get them off the Brite Platform, making withdrawal requests is unlikely to be a sound strategy unless you have a genuine reason to need the funds. Any funds withdrawn at this time will invariably be taken into account when they work out what is owed to each Brite member via whatever mechanism they apply if there are insufficient funds to make the members whole.

So taking funds now, which will likely be taxable, especially if not from any sort of lump sum allowance, is likely to be poor financial planning, so you should not rush and make any impulsive decisions, but rather seek the advice of a qualified and regulated financial adviser.

Also, if you are in a strong financial position, and do not need any access to funds at this time, then all your request is doing is clogging up the admin capacity of the Receivers for those who genuinely do have a strong need for the funds, so you will be impacting your fellow Brite members negatively.

If you already had a withdrawal request put in, or were in receipt of a regular income stream, prior to the 9th November then please carry on liaising with the Receivers, whether directly in the case of investment accounts, or through your Trustee in the case of pension accounts, and hopefully the payments will be forthcoming.

For those of you who have made, or are looking to make, withdrawal requests post 9th November, please make sure you only do so if you are in desperate need for the funds, as your request will unlikely be successful. And, if you do need the funds, make sure you put together a thorough reasoning for why you need the funds when submitting the request, as otherwise they will also likely reject your request, so take the time to be thorough.

Navigating Changes with Confidence

As the situation evolves, staying informed and adaptable is essential. Cameron James is dedicated to providing guidance and support during these times. For personalised advice and assistance, we encourage you to contact us or other qualified and regulated financial advisers.

Whilst there is still potentially a long way to go before the entire situation is resolved, and the ability to transfer out is possible, that does not mean you have to sit idly by waiting for that time. Getting out ahead of the process, and finding a professional, honest and regulated adviser to work with now, to prepare for that moment, will all but certainly be valuable down the road, whilst also helping you obtain some peace of mind, no matter how insignificant, that you are doing what you can to help get yourself into a better position.

Categories
Final Salary/ Defined Benefit

What’s the Latest with Your Investment at Brite Advisors?

For those invested with Brite Advisors, there have been some key changes recently. We at Cameron James want to ensure you understand these changes and how they might affect your investments.

If you’ve been affected by the situation at Brite Advisors, keep reading – this update is specifically for you. For more background on this case, you can read our previous blog post here.

Appointment of Corporate Receivers

Linda Smith and Rob Kirman from McGrathNicol were appointed as Corporate Receivers and Managers at Brite Advisors by the Federal Court of Australia on December 13, 2023. Their role involves securing Brite Advisors’ property, including client assets, and conducting thorough investigations. This move aims to stabilise the company’s operations and ensure proper management of assets.

Current Asset Status

The Receivers have successfully secured substantial assets, with investments valued at over AU $976 million (c.US $652 million). Their efforts are focused on stabilising the company’s operations and providing clarity on the status of client assets under management.

Now, this appears to be, on the face of it, some positive news. As per the last updates, it appeared that c.US $69m was potentially unaccounted for in Brite’s accounting system, which was much of the reason for the expedited appointment of the Receivers.

However, it appears that some of that may now be accounted for, so worries about missing/stolen funds are perhaps not quite as large as first suspected, in our opinion, as the last update from the Receivers would indicate. Given that they have not made further reference to missing funds and that they have stated their goal is now to move on to the loans to ascertain who has the rights to all the funds, is a further indication that they have moved in a positive direction towards accounting for the missing funds.

This doesn’t mean they are out of the woods, and a lot of funds still may be missing, but it is certainly appearing to be trending in the right direction, with the next report hopefully providing even more clarity on this point. The Receivers, of course, might be in a position where they don’t want to cause more panic, and are withholding such statements until the court report, once they have had even more time to investigate and can make a more declarative statement of the security of all the client assets under management.

Future Reports and Implications

A report is expected by 24 January 2024, which will shed more light on the future of client assets. This development is significant for investors and requires careful attention.

By this date, they will have hopefully obtained all the various loan agreements and contracts, and have a better, if not complete, understanding of the rights of ownerships of the funds, along with once and for all being able to confirm that they have control to all the client assets, and that there is nothing unaccounted for.

From there they can then work out what is client owned, and then it will likely be up to the courts to decide how clients will be repatriated with their assets, and what amounts they will be able to transfer to a new platform/provider etc. However, there is no way to know for sure what information they have obtained, and how far along we are until this report is completed and published. They will also 100% need to make sure that all the accounts reconcile, and that they have indeed got access to all the accounts and all the money.

Exclusion from Broader ‘Brite Group’

It’s important to note that the Receivers’ appointment does not extend to other entities within the ‘Brite Group’. This delineation is critical for understanding the scope of their investigation and actions.

However, whilst ASICS might only be looking at Brite’s Australian Entity, that is where the money is held, so should not be too much cause for concern, especially for those of you in the US, where legal action is underway from the SEC.

Restrictions on Withdrawals

We now have more clarity on the withdrawal process, after months of speculation and slightly ambiguous wording in court/receiver documents. If you set up a withdrawal instruction before November 9th, you’re likely fine to continue receiving regular income. But if you were planning to start taking money out or get your PCLS after this date, there’s a potential, if not likely, hold on that. 

We understand this might be frustrating, but it’s a necessary step for now given the complexities of trying to assess ownership of the funds. We have written another article that explains the new information around withdrawals, along with our interpretation and client experience received thus far.

Looking Forward: What’s Next for Your Brite Advisors Investment?

At Cameron James, we understand the challenges and concerns faced by investors during these uncertain times. It’s vital to approach this situation with a combination of patience and strategic planning.

Consulting with a qualified and independent financial adviser, who is regulated within your local jurisdiction, is a crucial step to ensure you do not make the wrong decision for your funds. Establishing this professional relationship early on, rather than scrambling when your funds are ready for transfer, is essential. Haste in such matters, driven by the eagerness to move funds quickly, can inadvertently shortcut the due diligence process, potentially leading to decisions that may not serve your best interests in the long term. Taking the time now ensures a thorough and considered approach to your financial future.

Our team is here to offer empathetic, expert advice to help you navigate these changes. We’re committed to providing clear, understandable guidance, ensuring you make informed decisions for your financial future. If you’re impacted by these developments, don’t hesitate to reach out to us for support.

Categories
Final Salary/ Defined Benefit

What is the Status of my Brite Advisors Pension?

 

Brite Advisor’s and Australian Regulator Court Case

Written by: Eduardo F. Simoes (IFA) and Jonathan Laws (IFA)

 

Updates:

  1. February 1st: The court-appointed receivers Linda Smith and Rob Kirman continue efforts to unravel Brite Advisors’ financial discrepancies, with their investigation uncovering a $69.1 million variance in reported assets, questionable related party transactions, and potential misuse of client funds.
  2. February 6th: The Federal Court ordered the liquidation of Brite Advisors on 6 February 2024, appointing receivers to wind down operations after an ASIC probe revealed a $69.1 million discrepancy in client assets. Click here to read more details on the liquidators’ role and latest updates in overseeing the liquidation process.

 

The Federal Court of Australia has issued a significant order concerning Brite Advisors Pty Ltd, following the Australian Securities & Investments Commission’s (ASIC) legal actions. This pivotal development in the Brite Advisors case involves appointing Corporate Receivers and Managers for Brite’s assets, marking a potential critical juncture in the proceedings.

 

 

Key aspects of the court order include:

  • Appointment of Corporate Receivers and Managers: Linda Smith and Robert Kirman from McGrath Nicol have been appointed to take control of Brite Advisors Pty Ltd’s assets. This move is designed to ensure a thorough investigation and secure the company’s assets.
  • Detailed Objectives: The Corporate Receivers and Managers are tasked with identifying, collecting, and securing Brite Advisors’ assets. Their role includes assessing the financial positions of Brite’s clients, determining the solvency of the company, and evaluating the likelihood of creditors/investors receiving returns in the event of a company wind-up.
  • Asset Preservation Orders: The court has placed restrictions on Brite Advisors Pty Ltd. The company is restrained from activities like removing assets from Australia, engaging in transactions that impact the value of their assets, and incurring new liabilities.
  • Compliance and Reporting Requirements: The Receivers and Managers must report their findings and actions back to the court and ASIC, ensuring transparency and accountability in this process.

This court order represents a crucial step in addressing the complexities surrounding Brite Advisors Pty Ltd and seeks to protect the interests of its clients and investors during this challenging period.

For clients affected by the shutdown of the Brite Advisor platform and the restricting of assets, this court development is significant. Receivership, the process now unfolding, involves appointed professionals (the Receivers and Managers) taking control of a company’s assets to manage and protect them.

This is often a step towards restructuring or liquidating a troubled company. For clients, this phase is crucial as it aims to safeguard assets and potentially recover funds. The appointment of Corporate Receivers and Managers could bring more clarity and structure to the situation, offering a pathway towards resolving the complexities surrounding the frozen assets and the platform’s future. This development is a vital step for clients looking for resolution and access to their investments.

 

Our Thoughts

Just a quick caveat, but this section is our own opinion on the matter, and should not be construed as any sort of opinion from a legal authority. Whilst we are very knowledgeable advisers, and many of us have professional qualifications, we aren’t lawyers! 

Many of you might read the above summary, and the actual regulatory announcements, and get very worried. But, in our opinion, this latest development is actually a positive. Whilst it does indicate that there are indeed issues with reconciling all the client assets, that is something that we, and most of the clients we have spoken with, anticipated. Hence, it is not a great shock.

We see it as a positive as it indicates that the regulator is being proactive, and is putting in place steps to secure your money. Long story short, it makes it likely that you are closer to a conclusion, one way or the other.

At this stage, the best approach is to carry on a normal advice process with a regulated financial adviser, especially until the Receivers complete their report. What will ultimately be the outcome is hard to know; but if we had to guess, it is likely some form of haircut to client funds once all funds reconciled, and loans settled etc. However, we can not know for sure, and that is just our “laymen” opinion based on similar situations that have occurred. Also, you never know, they might secure all the assets, and there is no loss, and all the panic and worry was for nought! 

We would also, as we always do, preach patience. Whilst the regulators have been very swift so far, it would not surprise us if this drags on for months and months, perhaps even until 2025 and beyond. However, gauging from how swift the Australian Regulator has moved, and given that the US SEC is involved, and thus there is now their significant authority, financial, and man power involved, that hopefully it won’t drag out that long, but do want to set out expectations, as a speedy resolution is not likely.

Staying on top of the proceedings, which we will also endeavour to do via regular updates such as this, and going through a proper advice process with a Regulated Financial Adviser is the best strategy at this stage.

 

Transferring Out of Brite Advisors Pension & Platform

Currently, it does not appear possible to transfer out of the Brite Advisors platform due to the restrictions imposed by the Australian regulator. With the SEC looking to terminate Brite’s regulatory permissions, a transfer in the future seems increasingly likely, but will likely require the resolution of legal proceedings, especially those occurring in Australia. We have written an article on this previously, which you can read about through the following link.

For now, the best course of action is to undergo a thorough advice process. This preparation ensures that you are ready to make a swift and informed transition when the opportunity arises.

Whilst we only provide advice specific to each individual, what we can say is that at Cameron James, our preference is for FCA-regulated platforms, known for their high level of asset protection. This approach applies even when managing a Maltese QROPS; we will in the majority of cases opt for an FCA-regulated platform within it, prioritising the safeguarding of assets over the use of offshore bonds, even if they can be a lower cost overall, especially for larger pensions. This strategy is central to our commitment to providing secure and reliable financial solutions for our clients. Sometimes a premium is well worth the security and peace of mind it provides.

 

STM as Trustee & Appointing New IFA

STM, a QROPS Trustee in Malta and Gibraltar, has recently updated some Brite clients we are in contact with about the situation with Brite Advisors. The main point is that the Australian regulator has put a hold on all Brite’s assets, including the funds belonging to customers. This step is likely temporary and is part of a detailed financial review. While this restriction is in place, you can still withdraw regular money from your accounts, but you’ll need approval from the Australian regulator first, and this seems to be taking a long time to process. STM hasn’t specified any special conditions or how long these withdrawals might take. It is also worth nothing that STM is not the only Trustee involved, or though it does appear to be one of the main Trustees for Brite USA clients. 

Also, if you’re considering moving your money to a different company, scheme, or financial advisor, STM has said that this is okay. You have the option to transfer your funds, but just remember that any transfer will need to meet the standard regulatory rules and requirements.

Again, it might very well be the case that the best advice is to keep your existing scheme, but that can not be confirmed until you go through the advice process and obtain formal regulated advice.

 

Seeking a New Adviser or IFA

For clients whose pensions are managed through the Brite Platform, actively seeking a new financial adviser is likely to be a prudent step towards securing your future financial stability. The ongoing regulatory interventions and asset restrictions associated with the Brite Platform indicate that an immediate transfer may currently be unfeasible. Nevertheless, forward planning is crucial in this scenario. Being prepared for eventual changes in the platform’s operations is not just advisable; it’s essential for maintaining control over your financial future.

Given these uncertainties, it’s wise to explore and evaluate potential advisers now. This proactive approach ensures you’re not caught off guard should a swift transition become necessary. It allows you to make informed decisions based on a comprehensive understanding of your options, rather than hurried choices under pressure. By preparing in advance, you position yourself to respond effectively to changes, safeguarding your pension and ensuring continuity in your financial planning.

 

Other Financial Advisers

Be wary of financial advisers getting in contact with you directly, especially unsolicited. Whilst it is banned to cold call people about their UK pensions, there are some loopholes that can make it possible for overseas advisers to contact you in a certain manner within an interesting interpretation of the rules, it is still not a client finding technique that inspires confidence.

At Cameron James, we do not cold call. All our clients come to us through our website or referrals. We consider cold calling to be a remnant of a bygone era, an era that needs to end sooner rather than later. With recent calls from the FCA to ban all cold calling in regard to UK financial services, that era might be ending sooner rather than later.

Also, be wary of any sort of offers to “bulk” transfer or provide or accommodate any sort of “one-size fits all” approach. Financial Advice is tailored to each person’s unique situation, it can not be applied by rote to every individual.

Every client, regardless of whether they are from Brite or not, needs to have a proper, thorough advice process, and obtain advice tailored to their unique circumstances. Whilst it is likely that a lot of people receive relatively similar advice, given the relatively homogenous nature of Brite Clients, that does not mean everyone will have the same advice, so going through the process with an adviser is of paramount importance. This includes filling out a client profile, acquiring hard facts, and producing a formal recommendation, in writing.

Some people might keep their Trustee, some might change it, some might even completely change jurisdiction, it all depends on you and your circumstances.

We would also mention to those of you who moved to Brite from a legacy product which still contains an exit penalty due to the repayment of an original commission paid, that any advisers offering to help you transition your exit penalty over, should be considered with the utmost due diligence and attention.

Whilst it could be the case that you are not paying any extra fees, the offer of transferring an exit penalty partially explains why some of you are in the situation where you are now. Perhaps you did not, completely understandably, want to stomach such a large fee being paid in one go, and so the desire to spread it out made Brite’s offer attractive. You also have to remember that the exit penalty is a sunk cost, you are going to be paying back that commission, whether you bite the bullet and do it upfront, or you spread it out over several years. Whilst technically spreading the payment period out can result in less impact on your pension value, that is only applicable if your pension pot rises, and as I am sure you are aware either personally or from reading up online, investment portfolios attached to commission products have a nasty habit of not increasing in value, even when the wider capital markets have soared.

Given that it is also very likely you want a clean break, and to say goodbye to this entire saga, signing up for yet another exit penalty, even if it is the continuation of an existing one, is unlikely to be a sensible option. This offer also signals to you that you aren’t dealing with a modern “fee-only” adviser and are engaging with an adviser who continues to use commission products. Whilst commissions don’t necessarily mean higher fees, in our opinion they are opaque and have a bad reputation for a reason, and are best avoided.

Otherwise, the standard warnings apply, which again, you can read through and use to assess advisers you speak with, using our  12 things to look out for in a new IFA YouTube video below.

 

 

Other Things to Consider

It should also be noted that this is likely to be a significant portion of your retirement funding, and you want to make sure that the adviser you choose now to help you out of this situation is someone you like and trust.

Building a long-lasting relationship with an adviser you trust and someone you not only would be willing to work with, but enjoy working with, is incredibly important.

That is also how we work at Cameron James. We only take on clients who we want to work with long term. A transactional relationship is not what we are after, and in our experience, many clients who seek out a transactional relationship get burnt, as many of you reading this may have already experienced. 

Transactional relationships often lead to subpar client experiences, characterised by minimal engagement, inadequate information, and a general lack of comprehensive service.