ASIC suspends SMSF firm’s AFSL over PI obligations
A financial advice firm has had its AFS licence suspended after it was unable to obtain professional indemnity insurance to comply with its obligation to have adequate compensation arrangements.
In an online announcement, ASIC stated that it has suspended the Australian financial services (AFS) licence of Perth-based SMSF advice firm Ballast Financial Management Pty Ltd until 18 December 2020.
According to ASIC, Ballast ceased carrying on a financial services business when it was unable to obtain professional indemnity insurance to comply with its obligation to have adequate compensation arrangements.
“Under s912B of the Corporations Act 2001, AFS licensees must have arrangements for compensating retail clients for losses they suffer as a result of the licensee or its representatives breaching their obligations in Chapter 7,” ASIC explained.
“The 10-week suspension will give Ballast sufficient time to put in place adequate compensation arrangements. The suspension also provides Ballast an opportunity to identify and appoint an appropriately qualified and experienced responsible manager following the resignation of its previous responsible manager.”
ASIC warned that if Ballast is unable to demonstrate that it is in a position to recommence its financial services business by the end of the 10-week suspension, ASIC will consider cancelling its licence.
Ballast Financial Management Pty Ltd has held AFS licence no. 233180 since 1 October 2003.
In January this year, ASIC imposed a five-year ban on one of the advisers of Ballast Financial Management Pty Ltd, who was the responsible manager and director of the firm.
The adviser has applied to the Administrative Appeals Tribunal of Australia for a review of ASIC’s decision to make the banning order.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.