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Australia: an Australian Financial Services Licence is a privilege not a right.

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Editorial Staff

In an unusual case, an Australian who applied to the Australian Securities and Investments Commission (ASIC) for an Australian Financial Services Licence (AFSL) was refused. He appealed to the Administrative Appeals Tribunal (AAT) which has upheld the decision. That, of itself, is uncommon but it's the grounds for refusal that turn it into a story.

But first some interesting information about information.

21 December was the Friday before Christmas. Christmas Day was the following Tuesday. Christmas Day and Boxing Day, the 26th December, are bank ("public") holidays in Australia. One week later, New Year's Day is also a bank holiday. Over the Christmas break, many people cluster days off, days-off-in-lieu, flexi-days and (in some countries) "sickies" to provide an extended break with minimal impact on annual leave. There is absolutely no reason to expect that either ASIC or the AAT is any different. What, in practical terms, it means is that from close of business on 21 December until Monday 7 of January, pretty much any business other than those where plant must be maintained are running on a significantly reduced workforce. Things take a long time over the Christmas and New Year break in many countries. In Australia, the fact that it coincides with mid-summer means it's annual holidays time for many, and that exacerbates the situation compared to Northern Hemisphere countries. That, dear reader, is why we are reporting, today, news that is several weeks old, for today we received, from ASIC, information relating to a case decided by the AAT on 21 December last year. The case report was published at AUSTLII on 3 Jan, well within the Christmas "demi-shutdown."

When Michael David Watson applied for his Australian Financial Services Licence (AFSL) on 30 June 2016. Since then, ASIC rejected the application, Watson appealed to the AAT and the AAT dismissed his appeal. That dismissal was on 21 December.

The fact is that his application never really got off the ground but the reason it didn't get off the ground may be regarded as indicative of a new approach at ASIC as a result of the Royal Commission into banking, etc. in which ASIC has come in for some major stick. However, the decision long pre-dates that Commission. Some might consider the decision harsh but, given the recent attitude of the Hong Kong Monetary Authority to applicants for licences there, it may also be influential in a wider change in regulators' attitudes.

Watson's application was not, primarily, rejected because he was patently unsuitable. On the contrary, like those in the HK example, it was refused because he didn't fill in his forms properly. As a result, ASIC said, it was unable to assess his suitability for the grant of a licence and therefore refused his application.

In fact, what it demonstrates is that at that time, ASIC went out of its way to help Watson with his application. ASIC says "Watson applied for a limited AFS licence to provide financial product advice in relation to self-managed superannuation funds, amongst other financial products. After assessing the application and providing Mr Watson with a right to make submissions and be heard, on 20 October 2017, an ASIC Delegate determined that Mr Watson’s application be refused."

An ASIC spokesman, Warren Day, said "ASIC is not simply a rubber stamp. We need applicants to provide all relevant supporting information, rather than just insisting what they have chosen to provide is adequate." In particular, it appears, Watson's lack of information related to his experience and his industry specific training courses: "applicants must be able to demonstrate that educational courses they seek to rely on cover the appropriate technical content needed to operate the licence," said Day (corrected for grammar).

Watson was not a poorly educated man and nor does he appear to be an example of the "chancers" who have obtained financial services licences in Australia and elsewhere: in addition to a BA in Commerce from the University of Western Australia he holds a Graduate Diploma from the Institute of Chartered Accountants in Australia. Over a period of years prior to his application he had held a variety of relevant positions:

 


 

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