The Australian Securities and Investments Commission (ASIC) cancelled the Australian Financial Services Licences (AFSLs) of seven licensees who did not have adequate professional indemnity insurance.
ASIC revealed it had identified the seven licensees after its review of financial advice licensees who had not requested the release of a security bond that was required under a previous licensing regime.
ASIC identified 98 financial advice licensees that had not sought the return of their security bond, and contacted them to remind them to apply for its release.
"As part of the conditions of release, each licensee had to provide ASIC with evidence of their professional indemnity insurance arrangements," the regulator said.
"Even if licensees were not prepared to apply for the return of their security bond, they were still required to provide evidence to ASIC that they had in place necessary insurance arrangements to comply with Corporations Act requirements."
As a result of these enquiries and related actions, ASIC:
- Cancelled seven AFS licences
- Referred three licensees for further action for failure to have adequate compensation arrangements
- Released, or is in the process of releasing, 54 security bonds
- Prompted 17 entities to voluntarily cancel their AFS licences as they were no longer operating a financial services business, and
- Confirmed the professional indemnity insurance arrangements of the remaining licensees.
ASIC deputy chairman Peter Kell said, "This review has assisted ASIC to remove licensees which are failing to meet their professional indemnity obligations and further, to identify licensees that are no longer active.
"Licensees must ensure they are up-to-date with and actively complying with all current obligations, otherwise, ASIC will take further regulatory action, including cancellation of the AFS licence."
