Australia: an Australian Financial Services Licence is a privilege not a right.
Publication:
BIScom Subsection:
Thursday, 10 January, 2019 - 04:48
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.
He was a director and shareholder of:
(i) Advali Accountants Pty Ltd ABN 12 152 080 932 previously known as Watson Finance Pty Ltd (30 March 2016 to 20 February 2017) and before that, Pancontinental Financial Advisers Pty Ltd (24 September 2014 to 30 March 2016);
(ii) Watson Investments Corporation Pty Ltd ABN 37 602 761 437 (Watson Investments) previously Pancontinental Investment Advisers Pty Ltd (2 December 2014 to 30 March 2016);
(iii) Advali Pty Ltd ABN 11 612 996 577; and
(iv) Advali Advisors Pty Ltd ABN 36 620 163 840 (incorporated 30 June 2017).
Advali Accountants Pty Ltd has been a registered agent of ASIC since 14 October 2014 with registered agent number 35302.
From 23 January 2015 to 11 May 2016 the Applicant was authorised representative number 471650 on Australian Financial Services Licence (AFSL) number 226415, held by Merlea Investments Pty Ltd ABN 38 062 546 516 (Merlea).
Merlea’s AFSL authorised Merlea to:
(a) provide Financial Product Advice for the following classes of financial products:
(i) deposit and payment products limited to basic deposit products and deposit products other than basic deposit products;
(ii) debentures, stocks or bonds issued or proposed to be issued by a government;
(iii) life products including investment life insurance and life risk insurance;
(iv) interests in managed investment schemes including: investor directed portfolio services;
(v) retirement savings accounts products;
(vi) securities;
(vii) standard margin lending facility; and
(viii) superannuation.
(b) deal in a financial products by applying for, acquiring, varying or disposing of a financial product on behalf of another person in the following classes of financial products:
(i) deposit and payment products limited to basic deposit products and deposit products other than basic deposit products;
(ii) debentures, stocks or bonds issued or proposed to be issued by a government;
(iii) life products including investment life insurance and life risk insurance;
(iv) interests in managed investment schemes including: investor directed portfolio services;
(v) securities;
(vi) retirement savings accounts products;
(vii) standard margin lending facility; and
(viii) superannuation
to retail and wholesale clients.
Merlea authorised the Applicant and Watson Investments to provide advice in: deposit and payment products; derivatives; government debentures; life products; interests in managed investment schemes; retirement savings accounts; securities; standard margin lending facility; superannuation and miscellaneous financial investment products; and managed discretionary account services to retail and wholesale clients.
It was agreed grounds that "In the time that Mr Watson was an authorised representative of Merlea, he did not provide financial services to any clients as an authorised representative of Merlea. This was confirmed by Merlea by letter dated 6 March 2018 to ASIC"
His application was "in his personal capacity [and] not on behalf of any entity of which he was a director or shareholder.
There was an additional educational claim: the he held "a Diploma of Financial Planning from Mentor Education AU." Mentor Education, based in the Melbourne suburb of South Yarra, says that it is "Australia's largest privately-owned finance, accounting and business education provider...As a Registered Training Organisation (RTO 21683) all Mentor Education qualifications are nationally recognised." On its website, it lists, as "where our graduates work," a who's who of the Australian financial services industry. There is little doubt that it is a widely recognised training company. Importantly, its government approvals provide for criminal sanctions against its officers for certain failures. Mentor does not mess around.
The applicant must demonstrate the following:
The following obligations under s 912A are relevant to Issue 2 in the present case:
do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly: s 912A(1)(a);
comply with the conditions on the licence: s 912A(1)(b);
comply with the financial services laws: s 912A(1)(c);
have available adequate financial resources: s 912A(1)(d); and
knowledge of the financial services covered by the licence: s 912A(1)(ea)
