Winley ARs were victims too

Winley ARs were victims too | Insurance Business

Winley ARs were victims too
PSC Connect managing director, Tony Walker, has defended the former Winley Group Authorised Representatives (ARs) affected by the company’s demise in Perth, Australia, saying they are victims too.

Walker said his company had taken on eight of them following the fallout of Winley’s major investors absconding while underwriters were left unpaid for several months.

“PSC Connect Pty Limited (Australia) and PSC Connect Limited (NZ) do not attribute any blame to the Authorised Representatives who worked with Winley as they are also victims in this story,” Walker told Insurance Business.

“PSC Connect has taken eight Authorised Representatives under its wing who meet its strict acceptance criteria in regards to experience, qualifications, character and reputation.”

Walker said PSC Connect networks operated under strict governance and provided a very supportive and constantly upgraded infrastructure, charging appropriately for the high level of service offered.

“Shortcuts are not taken and the PSC Connect network need have no concerns around the integrity of the business they choose to align themselves with.”

Walker said Winley’s poor infrastructure and unsustainable margins had constituted a ‘recipe for disaster’.

“Winley retained less than 10% of the remuneration paid to the Authorised Representatives in their network. In addition they offered them a sign-on bonus, free PI insurance, free IT costs, but this cut into their income leaving them far too short financially to properly manage and support a diverse national network.

“Also there appeared to be no accountability to a parent company, as is the case with the more reputable authorised representative networks in Australia.

“This was a recipe for disaster and enabled the directors to take shortcuts and misappropriate monies, resulting in devastating consequences for all connected to this group.”

Allianz recently issued a statement that it would not be automatically endorsing broker requests to appoint authorised representatives and would be ‘exercising caution when committing to transact with former Winley ARs.’

But Walker said he hoped that the views of clients and insurers would not be prejudiced against AR or member broker networks as a result of the collapse.

“After all, the embezzlement and misappropriation of client monies did not involve any of the Winley authorised representatives.”

However, he added: “This should serve as a reminder to all clients to ensure that the proper checks and balances are in place and they should feel free to ask these types of questions when choosing who will be their trusted adviser.”

David Crawford, director of Insurance Advisernet New Zealand, said while the licensing aspect of Australian ARs was peculiar to Australia, the model in New Zealand was very similar.
Crawford said IANZ had taken several extra steps to put in checks and balances nonetheless.

“From our perspective in New Zealand we operate a trust account for client funds and have done so for nearly 10 years now.

“This is not a statutory obligation, we did it because it was the right thing to do. The trust account is reconciled to the last cent every day and then checked by Australia monthly.

“We have the account externally audited annually and distribute the results to our brokers and key insurer partners.”

IA managing director Shaun Standfield was keen to defend the AR model, saying it was all about how they were set up.

“For example, the Winley website had no reference to the managers or the board. Overseas directors apparently had access to the trust account, and that is not necessarily a smart thing.
“We have much more stringent measures in place.

He said Winley’s offer of $10,000 to join them made the adage ‘if it seems too good to be true then it probably is’ spring to mind.

“These models are about hard work over a sustained period of time. The rewards don’t come straight away. I don’t know how they were able to operate that way – setting up the proper infrastructure is expensive and perhaps costs were cut.”

Crawford added: “It is relatively easy to set up a distribution group/aggregator. It is much harder to put a support framework in place to help smaller independent brokers operate and prosper in a highly competitive and increasingly complaint environment.”

Standfield applauded Allianz’ measures and said such measures were vital to keep the issue fresh in people’s minds.