People invested their money and faith with this man: Inderesan 'Pullen' Pillay. Credit:Simon Bosch and Peter Rae "He knew I didn't have the ability to work full-time because I had to look after Lauren. He knew her since she was born." It all went wrong, of course, and today the investments are worth nothing. The family is now saddled with debts of more than $200,000 after they leveraged their home into the ill-fated MIS products flogged by pine plantation operator Willmott Forests, pearl spruiker Arafura Pearls and timber and horticulture business Rewards Group. "When things were going bad, I could never get hold of him."

Many victims The Barrows are not alone. The couple are just two of hundreds of Pillay's former clients who still bear the financial scars from questionable advice from the one-time accountant, tax agent and financial adviser who, at different times, was an authorised representative of Count Financial (now owned by Commonwealth Bank) and Australian Planning Services (now owned by Melbourne's Heine family). Unlike some investors of managed investment schemes (MIS) who waded into the products for their big upfront tax deductions, most of Pillay's clients were unsophisticated investors on modest salaries. They didn't realise he was getting massive commissions every time he flogged a product. A Fairfax Media investigation can reveal that hundreds of Pillay's clients say they were misinformed about the risks and his conflicts of interest. They were told that the worst thing that could happen was the trees could burn down – but in that case insurance would cover any losses.

The emotional energy you use up in this situation is quite destructive. Marc Hopkins A significant number of the MIS products he sold were offloaded after the sector-shattering collapses of MIS giants Timbercorp and Great Southern, failures that sparked a crash of confidence in agribusiness MIS products and helped expose the huge flaws in their Ponzi scheme-like business models. Modest office Operating at the time out of a modest brick veneer office in Sydney's western suburbs, with a handful of staff, Pillay wore three hats: tax agent, accountant and financial adviser. Some of his staff also gave advice and were at various times pinged for compliance problems. Some of his clients are now living in tents, suffered marriage break ups, lost their homes and businesses. Almost 300 clients are estimated to be down by about $70 million.

The system looked the other way. Fairfax Media has obtained a trove of documents that show that despite Pillay having compliance issues from late 2005 and even being suspended from giving financial advice and reported to ASIC, no public sanction followed. No regulatory wire was tripped. Flaws in the regulatory system allowed him to jump between seven licensees over more than a decade. Over that period, documents reveal that other licensees had issues with his compliance records. 'Pullen' Pillay's Long Jetty office, PPC Business Solutions. Credit:Peter Rae A document obtained by Fairfax Media confirms that ASIC contacted Pillay in 2012 about advice he gave in relation to Arafura Pearls, but little seems to have happened as a result. And Fairfax Media has seen evidence of major inconsistencies in the paperwork received by former clients, many of which mention an array of different businesses, licence holders and people who supposedly gave advice, made referrals or banked commission payments. Limited action

ASIC has now confirmed it is investigating Pillay, which is little comfort to the Barrows and others. It seems the licensees that failed to control Pillay are now fighting the victims. They have so far been playing hardball on compensation. Pillay, 63, is still licensed to give financial advice, operating a combined financial planning, accounting and tax agent practice called PPC Business Solutions on the NSW central coast. It trades under the licence of Accountable Financial Solutions, which did not return calls. The accounting business bearing his name, Pullen Pillay & Co, was sold in 2011 and renamed. It now has no relationship with Pillay. Fairfax Media sent a list of questions to Pillay, who refused to respond.

"As the matters raised in this and your other email are before the Financial Ombudsman Service, it is inappropriate for me to respond to your questions," he said. In a follow-up email, he said he did not want to be contacted again. Litany of complaints Pillay stands accused of a litany of misbehaviour: reckless financial advice, conflicts of interest, grievously inadequate documentation (including documents in wrong names and mentioning entities who his clients hadn't heard of), clients being told they signed documents they don't recall signing and forms being backdated. The Barrows, with assistance from financial compensation group Financial Resolutions Australia (FRA), have lodged a complaint with the Financial Ombudsman Service (FOS), one of six Pillay-related complaints that Fairfax Media understands are being used as test cases. Diane and Ken Barrow with their 23 year old daughter Lauren and their 7yo labrador Mia. Credit:Wolter Peeters

There are a total of 28 filed so far. Hundreds of other former clients have prepared complaints ready to lodge with FOS. The case throws the spotlight on a host of yet-to-be-fixed issues that have plagued the world of financial advice for years – to the detriment of untold numbers of Australians. They include the licensing regime for financial planners, which ASIC and others say is full of gaping holes; a poorly administered financial advisers register that omits crucial details; FOS, whose critics say is too bureaucratic and is subject to financial caps, and a lack of a compensation scheme of last resort as a safety net in egregious cases. It also exposes the flaws in the regulatory framework which have been shown through a myriad of scandals, including CBA and NAB's financial planning scandals and IOOF, that systemic issues can continue until a whistleblower or the media exposes the wrongdoing. Massive sales

Pillay's modest office in Sydney's west belied the enormous volume of investments he was pushing through. FRA director Stephen Baume estimates that by 2009 Pillay was selling around 4 per cent of the total Australian market for managed investment schemes and by 2010 it had increased to 5 per cent. "This wasn't a big flash office in the CBD with high-net-wealth clients but the victims were mums and dads, many struggling, all happening out of a suburban office … at a time when the market for agribusiness was contracting – and commissions accordingly rising – Pullen Pillay was expanding." As the election heats up, concerns about misconduct in Australia's financial services sector have grown louder. Labor and the Greens have pledged a royal commission into the issue. But the Coalition has so far resisted calls, insisting ASIC is a "tough cop on the beat". But victims of poor financial advice straddle both sides of the political divide. The Barrows are in shadow treasurer Chris Bowen's electorate but at least one of Pillay's other victims lives in Treasurer Scott Morrison's electorate.

A number of them live in marginal battleground electorates of suburban Sydney like Greenway and Lindsay. From pine trees to pearls Brad and Roxanne Tunkin are in the electorate of Greenway, currently held by the ALP with a margin of just 3 per cent. They, too, are repaying loans after being advised by Pillay to borrow against their home and take out other loans to invest in three different projects with Rewards, Willmott and bluegum outfit ITC between 2007 and 2009. They recently had to refinance their loans to make ends meet. Brad says he trusted Pillay because he had been his accountant. "When he said there were no risks, I believed him," he says. "I didn't realise he was getting commissions and that's why he was getting us into these products."

The Tunkins, like the Barrows, were also unaware that Pillay and his business were collecting a 17 per cent commission on one of the projects – Rewards – they invested in. (Rewards, which had raised $291 million from about 6000 investors Australia-wide for projects involving sandalwood, teak and others, called in the administrators in May 2010.) Secret deal They invested in other projects including Arafura Pearls, which, of all the MIS products flogged by Pillay and his business, was perhaps the most alluring.

Perth-based Arafura, which collapsed in 2011, was listed on the ASX in late 2006. It has emerged that in 2009 Pillay did a deal with Arafura's management to flog millions of dollars of product to his clients. "Pullen and I had discussed a sales target of min $3M up to $8M to achieve the agreed fee arrangement," the chief executive of Arafura Pearls, Andrew Hewitt, wrote on August 17, 2009 to one of Pillay's employees. Hewitt was referring to a deal he had brokered with Pillay earlier that day. Besides charging a 16 per cent commission on Arafura Pearls, Pillay had become a top 20 shareholder in the listed entity. He allegedly neglected to tell this to all of his clients. FRA, which is representing the Barrows in a complaint lodged with FOS, says they were classified as "assertive investors" yet they could tolerate very little financial risk.

He says the statement of advice (SoA), a key document that advisers need to provide, was not handed over before they signed up. After it was, it and other documents contained "serious errors on material personal and financial information". Pine problems Donna and Marc Hopkins, both nurses, tell a similar story. They had been seeing Pillay for their tax returns for two years before they signed up to a Willmott Forests pine project in 2010. "Money does grow on trees," they remember Pillay telling them in one of his seminars.

Under pressure from Pillay's office to invest as the end of the financial year approached, they borrowed $75,000 against their house to plough into Willmott in June 2010. Willmott folded in September 2010. The Hopkins' money trees never even made it into the ground. Pillay, meanwhile, lodged a bill with Willmott's administrators for the more than $700,000 in commissions he was owed for his salesmanship. "You engage somebody in that capacity because you think they are a professional, that they are going to do the right thing for you," Marc Hopkins says. "That is the most difficult pill to swallow; that sense of betrayal." FRA has again identified a string of apparent deficiencies in the documents and financial advice provided to the Hopkins, who have also lodged a complaint with FOS.

"The emotional energy you use up in this situation is quite destructive," Marc Hopkins says. Counting costs Documents show that when he was an authorised representative at Count Financial – and used the Count logo in the foyer of his business and on marketing material – Pillay's business was given a breach report and suspended due to an "unsatisfactory compliance standard" and competency exams. In fact, Pillay's compliance issues can be traced back to 2005, when, like many accountants around that time, he first started flogging MIS. In one email from that period, he writes: "I am now coming to the end of my run for the 2005 tax year. Had great fun with all my presentations this year, and have improved on and mastered it for the New Year."

But by November 2005, Count was growing concerned with Pillay's compliance standards. An email, sent by Count's professional standards manager to Pillay on November 2 and obtained by Fairfax Media, raised issues about his receptionist's involvement in preparing statements of advice. "It appears that [your receptionist] is heavily involved in the preparation of SoAs. This is leading to issues, which is understandable considering that [she] is not suitably qualified in which to compile advice. As the only authorised representative at your firm, this responsibility is solely yours, irrespective of how busy you may be in terms of meeting tax requirements." Board involved Marianne Perkovic, who is now executive general manager of wealth management advice at CBA financial planning, was the deputy chief executive of Count at the time Pillay and his company had failed compliance and were suspended from offering financial advice. In August 2006 Perkovic had become chief executive and managing director of Count and two months later, Pillay's questionable compliance record had been discussed at board level. He was informed by email that the Count board had agreed not to take any further action. The email did warn, however, that if the next audit result was also "unacceptable" as the June 28 one, he would be terminated.

In a statement, CBA confirmed that during the period he worked for Count between 2003 and 2008, he was "subject to ongoing compliance checks and ongoing supervision and monitoring". It said in 2006 it conducted an audit of files and contacted some clients. "The investigation found there was no breach of obligation resulting in client loss." It said Count notified ASIC of the investigation. Of the 292 complaints either with, or about to be lodged with FOS, 135 relate to his days at Count, where he sold an estimated $10.5 million of managed investment scheme products. Documents show that Count shared in the commissions of some of these products. CBA 'cares deeply' CBA refused to answer questions relating to Perkovic's role at Count during Pillay's time. In a statement it said: "We care deeply about providing trusted financial advice to our customers." It said CBA bought Count in 2011 and that Count holds an Australian Financial Service Licence (AFSL) that allows its members to offer financial advice. It said members generally also operate their own accounting businesses.

"It is not unusual for accounting businesses to have referral relationships with other financial services companies to recommend their services to clients." It said in July 2015 CBA started receiving complaints about Pillay from "accounting clients" represented by FRA. It said some complaints were also being assessed by FOS. Inderesan 'Pullen' Pillay. Credit:Peter Rae "As always, we approach these matters with an open mind and are fully co-operating with the Financial Ombudsman Service, as well as seeking information from Financial Resolutions Australia so we can understand the facts they are relying on." However, FRA's Baume says Count and other licensees have not been co-operative.

"There has been a failure to provide basic documents," Baume says. "Policy Guidelines and Compliance Reports that support our claims of poor behaviour by Pullen Pillay and his employers are not provided." Moving around Pillay resigned from Count in 2008 and landed at Morrison Carr, where he stayed until 2009. Morrison Carr's licence was permanently revoked by ASIC in 2012 amid deep concerns about its processes and the conduct of its founder, Dennis Cardakaris, who ASIC deemed was not of good fame or character. In 2011, Pillay went to Titanium Planners, a business with its own set of issues. In 2008, Titanium had announced it would partner with Astarra Asset Management on a product just months before regulators moved in on what would turn out to be the $176 million Astarra/Trio Capital fraud (the retirement product was never launched). In late 2011, the former Titanium planner Joshua John Doyle was charged by police with fraud over unauthorised share trading in a client's account and forging signatures. He was given a suspended sentence and banned from financial advice for life for the conduct, which took place during his time at Titanium.

In September 2012, Titanium audited three of the client files handled by Pillay's business. Documents obtained by Fairfax Media show that Pillay and his business failed the audit, after it found he and his business had contravened multiple laws governing financial advice. Titanium threatened a range of sanctions – including an official breach, a tip-off to ASIC, and withholding of commissions – if things didn't immediately improve. Instead, Pillay moved on again. Within two months, he was working under another company's licence (Titanium changed its name to Insignia Platforms in September 2013; it was wound up soon after). Pillay would end up working at seven different licensees in 13 years.

Shifting 'seamlessly' In the cases before FOS, the Barrows' dispute is with a company called Netwealth, which owns Australian Planning Services, another firm of which Pillay, at one point, was an authorised representative. In response to questions from Fairfax Media, APS confirmed that it had received complaints about the conduct of Pillay, and that a "limited number" were before FOS. "APS has responded to these complaints in accordance with its obligations as an AFS licensee," it said in a statement. The Hopkins, meanwhile, are dealing with Patron Financial Services, another financial services licence holder which had Pillay on its books for a time. Patron did not respond to questions. In Baume's words, Pillay was able to "shift seamlessly" through different licensed firms. This was made possible by Australia's much-criticised financial services licensing regime, which allows financial advisers to operate as "authorised representatives" of someone else's licence.

The business with the licence is supposed to make sure its so-called authorised reps are trained, competent and law-abiding. But this doesn't always happen, as the misconduct, fraud and forgery uncovered at the Commonwealth Bank's financial planning operation so vividly showed. And when things go wrong, advisers are too often able to simply leave and quickly find another licensee to take them on. New rules needed The Capability Review of ASIC, released last month, warned that the issue of licensing was "a potential emerging risk area". And ASIC itself has warned of a clear gap in the regime – that ownership or control of licensees can change without ASIC's approval. This was just one hole in the legislation that was not fixed by the Future of Financial Advice reforms in 2014.

ASIC chairman Greg Medcraft. Credit:Dominic Lorrimer John Berrill, a financial disputes lawyer, says when it comes to licensee shifting, there are strong similarities with how some churches handled abuse allegations. "Moving the perpetrators on, not taking responsibility for their behaviour and not reporting them," he said. One supposed remedy to this was the national financial advisers register, set up by the Coalition in response to a powerful Senate inquiry that reported in June 2014 after raking over the CBA financial planning scandal. Solution not registering The Coalition refused to hold the royal commission called for by the inquiry. The registry was offered instead, in a bid to track "bad apples".

But the registry fails to disclose much crucial information, such as whether an adviser has worked for a firm that has gone bankrupt or had its licence revoked. Gerard Brody, the chief executive of Consumer Action Law Centre, says a key problem is the register relies on advice businesses and planners to lodge the information themselves. "ASIC doesn't check or review all the information before it goes on the register, which is an issue," he said. Another flaw is it only details an adviser's employment history back five years, which misses many scandals that happened during the GFC. Pillay's entry on the Australian register records his time at Morrison Carr, for example – but makes no mention of the fate of that company. Nor does it shed any light on why he left each of his licensees. Fallout for FOS

Pillay's clients are now dealing with the FOS; the organisation that burned clients must turn to when they are in a dispute with a financial services group. FOS, funded by the industry, has been criticised for being too bureaucratic, lacking resources and having a cap on how much can be claimed. It means if there is a claim that exceeds a certain amount of money, the claim won't qualify and any redress is an application to the licensee or legal action. If a licensee goes belly up or refuses to pay, little can be done. It means hundreds and possibly thousands of customers are left out in the cold. Shane Tregillis, chief ombudsman of FOS is a strong advocate of a compensation scheme of last resort for victims who fall through the compensation cracks. "FOS has been advocating for five years and lodged a number of submissions," he said. According to the latest figures from FOS, more than $16 million of compensation applications in today's terms should be paid to victims but the organisations have either gone belly up or refused to pay.

At least 24 victims of Pillay are part of the "forgotten people". They have no redress because they invested in products when Pillay was operating under dealer group Morrison Carr, which shut down after its licence was cancelled in 2012. One reason for its banning was its failure to put in place proper compensation arrangements. Low standards CBA whistleblower Jeff Morris, who came across some of Pillay's clients a year ago and is helping them on a pro bono basis, says the hundreds of clients whose dreams have been shattered were victims of a system that has hung them out to dry. "You have a ludicrously low qualification standard for financial planners and grossly inadequate supervision and monitoring by licensees leading to inappropriate advice," he said.

It is why Morris and others believe a royal commission into financial services is the only solution. "It would expose the full consequences of the systemic failure of the system to protect consumers, many who have suffered through no fault of their own." Until then, people like the Barrows will have to keep working to pay off their debts. "I have to keep going," Diane Barrow says. "How else do I pay for these huge loans?" Do you know more? Email aferguson@fairfaxmedia.com.au