Financial Planner and bankruptcy due to unrelated business venture.

[JackFP]

I am a Self Employed Financial Planner (Authorised rep). Prior to becoming a Financial Planner, I have had provided personal guarantees in a business venture. Due to a dwonturn in business, I am no longer able to meet its liabilites and hence, have to declare bankruptcy. How does this affect me as a financial planner? Is the situation any different if I am employed as a financial planner?

[Andrew Ham]

Hi Jack,

Thanks for your question.

An individual is not, by virtue of being a declared bankrupt, necessarily prohibited from providing financial services as a representative (i.e. either as employee or authorised representative) of an AFS licensee under the financial services legislation or standard ASFL conditions.

However, the reasons for, and consequences of, your bankruptcy may be relevant to your AFS licensee and their obligations. It can make a difference how much to “blame” you are and how much creditors are out of pocket.

Your licensee has an obligation to “do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honesty and fairly”, including the financial services you provide.  The licensee is also obliged to ensure you are competent to provide the financial services.  You should check your Authorised Representative Agreement carefully.  You are likely to be required to inform the licensee promptly and you may be required to provide information regarding the reason(s) for the bankruptcy.  Your licensee may impose special or additional monitoring and supervision procedures to ensure these requirements are satisfied, assuming it is willing to continue the relationship.

You should also consider any relevant conditions on the AFSL, along with any terms in the employment agreement or authorised representative agreement between you and your licensee, which may be effected by bankruptcy.

If you require further information, please contact our Financial Services team.

 

Author: Andrew Ham

Co-contributors: Greta Walters and Nicola Stevenson.

Keep an eye out for the launch of our new Sydney office on Martin Place in July 2016!!  We are very excited about this opportunity to service our Sydney clients.

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