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ASIC suspends AFS licence of SMSF investment firm

ASIC
Tony Zhang
08 February 2021 — 1 minute read

ASIC has suspended the Australian financial services (AFS) licence of a Queensland-based financial services provider for a period of six weeks, effective 15 January 2021.

The regulator has suspended Investors Exchange Limited’s (IEL) licence because it failed to comply with financial services laws and maintain competence to provide the financial services covered by its AFS licence.

Specifically, IEL failed to lodge its annual financial statements and auditor reports by the requisite date for the financial years ending 2014, 2016, 2017, 2018 and 2019, and failed to lodge the compliance plan auditor’s reports for Investors Exchange Investment Fund by the requisite date in 2014 and 2016, and for both schemes by the requisite date in 2017, 2018 and 2019.

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The firm also failed to comply with the compliance plan for Dean Capital Property Trust No. 1 in 2012 and issued defective product disclosure documents in 2018 and 2019.

Under a previous version of its AFS licence, IEL had operated the registered managed investment scheme, SMSF Invest Property Fund, formerly known as Dean Capital Property Trust No. 1. IEL operated Dean Capital Property Trust No. 1 between 9 August 2006 and 18 December 2012.

“The suspension will allow IEL time to review its competence and take steps to ensure compliance with its obligations as an AFS licensee,” ASIC stated.

“ASIC has used its power under s915H of the Corporations Act to allow IEL to provide financial services that are reasonably necessary for the day-to-day operation of the schemes while the suspension is in place. During the suspension, IEL cannot issue new interests in the schemes.” 

ASIC said Investors Exchange will also be specifically prohibited from granting any further security over the existing assets of the schemes and offering redemption of interests in the schemes unless this is offered equally to all scheme members.

IEL will have the right to seek a review of ASIC’s decision from the Administrative Appeals Tribunal. 

Previously, Investors Exchange had also lost an appeal over an AFCA determination regarding its compliance failures over investments for an SMSF.

According to court documents, Lornette Superannuation Fund (LSF), a trustee, was persuaded by IEL to invest a total of $140,000 into two of Investor Exchange’s property development projects, one being in Maleny in the Sunshine Coast region.

Each project, however, was said to be a “financial disaster,” with LSF losing $132,230 of its initial $140,000 investment. 

The Supreme Court of Queensland found AFCA’s determination was reasonable, had been open to the facts and had correctly interpreted the documentation and dismissed the appeal with costs.

Tony Zhang

Tony Zhang

Tony Zhang is a journalist at Accountants Daily, which is the leading source of news, strategy and educational content for professionals working in the accounting sector.

Since joining the Momentum Media team in 2020, Tony has written for a range of its publications including Lawyers Weekly, Adviser Innovation, ifa and SMSF Adviser. He has been full-time on Accountants Daily since September 2021.

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