Finance firm licence cancelled over ASIC concerns

by Rebecca Pike25 Oct 2018

A financial services firm will have its licence cancelled over concerns it was receiving referrals from a mortgage business not licensed to provide financial advice. 

Austplan received client referrals from building and mortgage business GM Homes (Australia) Pty Ltd, which is not licenced to provide financial advice or any other financial service.  

ASIC will cancel the Australian financial services (AFS) licence of Austplan Pty Ltd (Austplan) effective from 25 November 2018 by agreement with the licensee. 

The regulator was concerned about Austplan’s ability to do all things necessary to ensure the advice provided by its representatives was compliant.

Its surveillance also found deficiencies in the financial services provided by a number of Austplan representatives, including their failure to act in the best interest of their clients in relation to establishing self-managed superannuation funds (SMSF). 

As part of the cancellation Austplan is required to comply with conditions such as maintaining its current Professional Indemnity insurance policy until the cancellation takes effect and its membership of Australian Financial Complaints Authority (AFCA) until all consumer complaints have been resolved.

Austplan will also have to submit the required financial statements with ASIC and retain all materials relating to personal advice provided by its representatives.

ASIC is continuing to make enquiries in relation to the advice provided and warned consumers about seeking further information on using SMSFs to invest in property. 

ASIC deputy chair Peter Kell said, "AFS licensees have an obligation to ensure that their representatives are adequately trained and competent to provide financial services that are in their clients’ best interest. ASIC will take action where we see licensees not properly supervising their representatives.

"SMSFs are not right for everyone. We encourage consumers to think carefully about investing in property and do their research before they set up an SMSF."