The Australian Securities and Investments Commission (ASIC) has imposed additional conditions on the Australian financial services licence (AFSL) of AxiCorp Financial Services, to ensure it has adequate compliance arrangements in place for its over the counter (OTC) derivatives business.
Under the additional AFSL conditions AxiCorp was required:
- To appoint an independent expert to conduct a review and assess whether it had adequate procedures and internal controls in place to ensure compliance with its regulatory obligations;
- The independent expert was required to identify remedial actions from the review and AxiCorp must provide a plan to ASIC setting out the remedial actions it proposed to implement;
- AxiCorp must maintain a minimum of three equivalent full-time compliance staff until 31 December, 2022; and
- AxiCorp must not appoint any corporate authorised representatives until 31 December, 2022.
AxiCorp was also required to provide ASIC with an attestation from a senior executive within AxiCorp.
The senior executive must confirm they were satisfied that AxiCorp had undertaken all necessary remedial actions and there were adequate compliance measures in place to ensure that it and its representatives complied with financial services laws.
If the executive attestation was not provided by the time required, AxiCorp would be required to take all necessary steps to cease on-boarding new customers and not charge customers commission or other fees for financial services provided, as the attestation remained outstanding.
ASIC suspended the AFSL on 2 January, 2020, for four months after finding it had failed to comply with certain financial services laws which included:
- Pay client money into an account with an Australian authorised deposit-taking institution;
- Comply with client money reporting rules;
- Lodge product disclosure statement in-use notices with ASIC;
- Comply with the ASIC derivative transaction rules; and
- Lodge financial statements with ASIC by the due date.
On the same day, AxiCorp applied to the Administrative Appeals Tribunal for a review and stay of ASIC’s suspension decision.
The tribunal granted a stay of the suspension, which meant that AxiCorp could continue providing financial services under their AFSL after 2 January, 2020, pending final review of ASIC’s decision.
Following the imposition of the additional licence conditions, ASIC and AxiCorp filed proposed consent orders with the tribunal, which set aside the decision to suspend AxiCorp’s AFS licence.
On 9 March, 2021, the tribunal granted the orders and set aside the suspension decision.