Chapel Road, the financial planning dealer group which had its licence revoked in April 2001, will be able to operate once again after the Administrative Appeals Tribunal ruled the group should not have been banned from operating.
At the time theAustralian Securities and Investments Commission(ASIC) claimed Chapel Road breached licence conditions by failing to have an adequate compliance system and failed to provide adequate initial and ongoing training to its proper authority holders as well as adequate supervision of them.
In handing the licence back to the dealer group the AAT stated that while Chapel Road may have breached its licence in the area of compliance and may not at the time have fully performed its duties under the dealers licence, the group was likely to do so in the future.
The Tribunal also ruled there was evidence that by the time of the licence being removed Chapel Road had made sufficient improvements in its compliance regime to an extent that the group would have complied with the requirements of its dealer’s licence.
As such the Tribunal stated that while ASIC had power to prevent abuses of licences and protect consumers the best course of action would not have been to remove the licence but rather impose conditions, under the Corporations Regulations, to ensure the group continued to improve its operations.
The decision comes after more than two years after ASIC revoked Chapel Road’s dealer’s licence on April 26 2001, with the dealer group immediately appealing the following day.
It has taken a series of hearings, in August 2001 where Chapel Road was granted a conditional stay of ASIC’s order pending further hearings which then took place in December 2002 and June of this year, for the group to fully regain its licence.
In the interim the group was allowed to operate but only under the condition that it told all existing and future clients and staff of the revocation proceedings and the stay of order and not engage any new staff or representatives until the matter had been heard by the AAT.
While this meant the group could still function, by June 2001 it had only four advisers, down from 39 at the time of the revocation effectively shutting down the group.
The AAT recognised this point when it said the revocation and proceedings were a sufficient deterrent for the group as was “the effective cessation of Chapel Road’s business in the intervening period” between the stay of order and last week’s hearing overturning the original ban.
