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ASIC stands by AFSL assessment process after recent cases

ASIC stands by AFSL assessment process after recent cases

Miranda Brownlee
05 March 2019 — 2 minute read

Following three different cases in recent months relating to the refusal of AFSLs for superannuation and SMSF advice, ASIC has said that it stands by its AFSL assessment process and has stressed that applicants must fully understand the requirements of a licence.

Between December and February, there have been three separate cases before the Administrative Appeals Tribunal of Australia relating to decisions by ASIC to refuse AFSLs for the purpose of providing financial advice on superannuation and SMSFs.

The first case in December heard by the tribunal was Watson and Australian Securities and Investments Commission [2018] AATA 4677.


ASIC refused to grant the applicant a limited AFSL on the basis that he did not provide all the relevant information it needed to appropriately assess and grant a licence. The applicant then applied to have the decision reviewed by the AAT.

AAT affirmed the decision of ASIC not to grant the limited licence on the basis that the application was not made in accordance with section 913A of the act, and that it was not satisfied that there was no reason to believe that the applicant was likely to contravene the obligations that apply under section 912A when an AFSL is granted: section 913B(1)(b), according to the decision.

The tribunal did, however, reject ASIC’s finding that there was reason to believe that the applicant was not of good fame or character.

The applicant, in his closing submissions, also made allegations of misconduct, perjury, fraud, poor ethical conduct and bullying against ASIC’s officers.

The tribunal stated, however, that these allegations and issues were not relevant to the tribunal’s decision on whether or not the application should have been granted.

The AAT also upheld the corporate regulator’s refusal to issue a limited licence to SMSF services provider Superannuation Warehouse Australia in January in Superannuation Warehouse Australia Pty Ltd and Australian Securities and Investments Commission [2019] AATA 88.

In a public statement on the matter, ASIC stated that the AAT’s decision took into account information referred to ASIC from the ATO about the audits of SMSFs undertaken by the sole director and nominated responsible manager of Superannuation Warehouse Australia, Johann Heinrich Preller.

In February, the AAT also upheld a decision by ASIC to refuse an AFSL to an accountant wanting to establish an advice firm specialising in superannuation.

The decision by ASIC to refuse the applicant’s application for an AFSL was based on the grounds that PI coverage in the policy provided did not cover the applicant for all services provided under the proposed licence, and that the proposed responsible manager was not RG 146 compliant in securities and SMSF financial products and personal advice.

Commenting on this most recent decision in February in a public statement released this week, ASIC’s executive director of assessment and intelligence, Mr Warren Day, said that the tribunal decision reinforces that applicants need to meet the standards imposed by the law and to provide ASIC with all relevant information requested to enable ASIC to make its decision whether a licence is to be granted.

“Failing to meet those standards means the licence application is unlikely to get very far,” he said.

“The deficiencies in this instance lead the tribunal to conclude it cannot be satisfied [that the] nominees would provide the financial services sought efficiently, honestly and fairly.”

Mr Day noted that this was the third instance in recent months where the AAT has affirmed ASIC’s refusal to grant a limited AFS licence on the basis that the applicants did not adequately meet requirements.

“We stand by our assessment process and encourage applicants to ensure they fully understand and can demonstrate their ability to comply with the responsibilities that come with holding a limited licence,” Mr Day said.

ASIC stands by AFSL assessment process after recent cases
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