Approximately 12,000 investors who placed around $1 billion of their retirement savings into two collapsed funds, Shield and First Guardian, face increased uncertainty following the recent covert sale of financial advice licensee Interprac Financial Planning. Interprac, which counts more than 6,000 of these investors as clients, was sold by its parent company, Sequoia Financial, to a newly formed entity, Bellbird Australia, raising concerns about the prospect of recovering investor funds.

The sale, finalized on Tuesday, was notified to the Australian Securities and Investments Commission (ASIC) only after completion. Bellbird Australia was registered as a company shortly before the transaction, with Scott Beeton—founder and former CEO of Sequoia Financial—appointed its sole director and shareholder. The transfer effectively severs Interprac from a deed of cross guarantee that previously tied its liabilities to Sequoia as the parent company, which investors had hoped would serve as a financial backstop.

ASIC had previously intervened in April to block an earlier proposed sale of Interprac to an unknown buyer, Conquest Investment Partners, citing concerns that Sequoia might evade its obligations under the cross guarantee and that creditors’ interests would be compromised. This time, no such regulatory action was taken, prompting investor advocates to question the protections now available for those affected.

“My biggest fear is that the sale of Interprac, together with the cancellation of Sequoia’s cross guarantee, could leave investors with a much smaller pool of money to recover from,” said Melinda Kee, an investor advocate. She emphasized that thousands of First Guardian and Shield claimants remain awaiting determinations from the Australian Financial Complaints Authority (AFCA) and deserve clarity on who is financially responsible.

Interprac investors have been entangled in claims processes for over a year, with the company engaging legal action against AFCA while determinations favorable to investors were being made. This has led to repeated delays in compensating affected individuals, many of whom invested their life savings into these funds.

The repercussions extend beyond direct investors. Wealth management platforms, wary of Interprac’s associations with Shield and First Guardian, banned new business from its advisers last year. Consequently, about 200 advisers have departed Interprac this year, with several joining AvalonFS, a rival licensee partly owned by Mr. Beeton, who maintains close ties to the sector. AvalonFS and Sequoia previously entered into an arrangement whereby Avalon paid $80,000 for Interprac’s cooperation in facilitating adviser transitions.

With the cross guarantee revoked, investor claims against Interprac may increasingly rely on the Compensation Scheme of Last Resort (CSLR), a government-backed fund that provides limited compensation—capped at $150,000 per claim—when a firm cannot meet its obligations. However, the CSLR has reportedly depleted its resources for the current financial year, indicating that any payouts could be significantly delayed.

ASIC’s regulatory options appear constrained given the finalization of the sale, though it is reportedly reviewing the now-defunct cross guarantee arrangement to assess potential remedies. The recent ban imposed on Garry Crole, who succeeded Mr. Beeton as Sequoia’s CEO until his resignation earlier this year, further complicates the corporate landscape; ASIC has disqualified him from holding financial services roles for ten years, although he remains a substantial Sequoia shareholder.

The unresolved status of Interprac’s financial liabilities underscores continuing challenges in protecting investors amid complex corporate restructures and regulatory limitations in the wake of the Shield and First Guardian collapses.