Insurance and financial services business Silvalake is being wound up after management allegedly told an insurer it’s more than $2 million in debt and can’t afford remittances.

With about 52 advisers and 50,000 clients, Silvalake’s members are reportedly concerned that the group’s adviser network could be caught up in litigation. Already a number of Silvalake advisers have spoken out, saying they’ve lost thousands of dollars because they’ve been prohibited from communicating with clients following the liquidation.

Wollongong-based Total Financial Solutions (TFS) was reportedly in the process of signing a deal to take control of the Silvalake’s adviser and client base before the French-based insurer Alliance sought a court injunction to freeze the group’s assets and place it under liquidation.

Association of Financial Advisers President Robin Yates said last week that the Financial Services Reform Act has forced many advisers to become authorised representatives of larger groups like Silvalake. He says becoming an authorised representative makes advisers more susceptible to decisions made by parent companies.

“There is a strong possibility that many financial advisers could be ruined,” he said.

TFS spokesman Gary Walsh told Sunrise Exchange News the group couldn’t comment on any dealings with Silvalake, and that all enquires should be directed through the liquidator, Downie and Associates.

Silvalake wasn’t taking any calls either, advising clients via an answering machine to refer any urgent matters to their advisers.