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Dr. Mark Sinclair
Dr. Mark Sinclair, Mentor Education

Synchron director labels exit fees as inappropriate.

18 November 2013

Don Trapnell, the director of Australia’s largest independently owned financial advice group, Synchron is considering lodging a formal complaint about licensees charging exit fees and was scathing in his comments about excessive exit fees.

The Synchron Director has stated that he was aware of two firms in Western Australia and Queensland who charge a “substantial amount of money” to dealers who attempt to move licensees. Trapnell believes that if a person is being charged a separate, specific run off cover, then they should have the right to recover it, and emphasised the insidious nature of “using the guise of professional indemnity insurance for run off cover instead of calling it what it is, an exit fee.”

Trapnell has labeled the practice as  “totally inappropriate” and has suggested that “advisers can best serve clients if they can move to licensees which better suit their business model.” The two ways that licensees are using provisions to trap advisers Trapnell says are: by charging exit fees, and having a compulsory review of investments of all clients built into their dealer transfer agreement and his firm is considering laying a complaint with the ACCC.

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