ASIC wins against Cigno Australia and BSF Solutions – May 24
Cigno Australia Pty Ltd and BSF Solutions Pty Ltd have been found by the Federal Court to have engaged in credit activity without an Australian Credit licence and charged consumers prohibited fees.
Cigno Australia director Mark Swanepoel and BSF Solutions director Brenton Harrison were also found to have involved in the unlicensed activity and made other Credit Act breaches.
Both companies have also been restrained from recovering any further fees, charges or other amounts from customers.
A further hearing is listed for June 21 to consider further relief against the respondents including adverse publicity orders and civil penalties.
“ASIC has taken regulatory and enforcement action over many years to respond to various business models used by entities connected to Cigno Australia, BSF Solutions, Mr Swanepoel and Mr Harrison.”
Sarah Court, Deputy Chair, ASIC
DDO stop orders against Trademax Australia – May 23, 2024
Two interim stop orders have been made against Trademax Australia Limited, preventing it from opening trading accounts or dealing in contracts for difference or margin foreign exchange contracts to retail investors. The interim stop orders are valid for 21 days unless revoked earlier.
According to ASIC, Trademax failed to comply with design and distribution obligations because of its “reliance on an inadequate retail investor questionnaire for compliance with its obligations and a lack of other controls in Trademax’s onboarding process to assess whether clients are likely to be in its target markets.”
To date, ASIC has issued a total of 86 interim stop orders and one final stop order.
Energy World restricted from issuing a reduced-content prospectus – May 23, 2024
Energy World Corporation Limited has been restricted from issuing a reduced-content prospectus for the next 12 months after contravening financial reporting obligations.
In two reports, June 30, 2023 and December 31, 2023, the company was found to be failing to comply with AASB 136 Impairment of assets after key assumptions were found not to be reasonable or supportable.
If the company wants to raise funds from retail investors during this period, it must issue a full prospectus to be able to do so.
Former adviser banned for three years – May 22, 2024
The former financial adviser Gawad Nabi has been banned three years from providing financial services after breaching multiple financial services laws.
Gawad Nabi was found to be:
- failing to act in the best interests of clients;
- failing to provide appropriate advice to clients by prioritising his own interests over theirs; and
- providing misleading or deceptive disclosure statements to clients.
He was also found not to be understanding his duties and obligations as a financial services provider under the Corporations Act, and cannot be relied upon to discharge those obligations.
QLD director disqualified five years – May 20, 2024
Laurence Christopher Pereira has been disqualified from managing corporations for five years due to a serious level of misconduct.
Between May 2001 and May 2023, Pereira was the director or officer of East Coast Services Group Pty Ltd, Proactive Energy Pty Ltd, PG Projects Pty Ltd, and LP Finance Pty Ltd – which all entered liquidation.
Pereira was found to have acted improperly and failed to meet his director’s obligations when he:
- didn’t ensure that the companies kept adequate financial records, or complied with their statutory ATO lodgement obligations, or paid tax debts, superannuation, employee entitlements and Workcover premiums;
- improperly used his director’s position to gain advantages for himself and others;
- transferred a business from one company to another without paying old creditors, plus transferred assets for no consideration;
- let East Coast Services and LP Finance trade while insolvent; and
- failed to apply for a director identification number during the time period.
At the time of ASIC’s decision, the companies owed a total of A$4,006,382 ($2,681,564) to unsecured creditors, including A$1,031,357 ($690,357) for unpaid wages, superannuation, and employee entitlements.
Cancelled AFS license
Everest Asset Management’s – May 21, 2024
The Australian financial services (AFS) licence has been cancelled for Everest Asset Management Pty Ltd after failures to prepare and lodge financial statements and auditor opinions with ASIC.
ASIC news week 21
Speeches
On May 21, Chair Joe Longo made the opening remarks at the ASIC UTS AI Regulators Symposium, where he addressed how AI can be used to improve outcomes for consumers.
“We need a strong regulatory framework to steer the course of AI towards its safe and responsible development and use. A framework that enables technological innovation to flourish, so that it can deliver the promised economic benefits and productivity improvements. But not at the expense of consumers and investors,” he said.
At the Australian Finance Industry Association Risk Summit 2024 on May 22, Commissioner Alan Kirkland spoke about the Commission’s priorities in a changing regulatory environment.
There, he addressed how global trends – such as the ongoing cost-of-living pressures, climate change, rapid technological transformation including cyber threats – are affecting consumers in their needs and how they navigate financial services markets.
“Our message in relation to each of these technological themes I have canvassed is simple: corporations’ obligations around good governance and the efficient, honest and fair provision of financial services don’t change with the uptake of new technology. Directors and officers should be actively considering how risks are evolving, and how their responses need to evolve in line with their obligations.”
Better hardship support expected from lenders
Home loan lenders need to do more to support those who are struggling to meet repayments, ASIC’s new report Hardship, hard to get help: Lenders fall short in financial hardship support shows. The report shows that some home loan lenders have made accessing financial assistance so difficult that 35% of applicants have dropped out of the process at least once.
And 40% of those who had received hardship assistance through reduction or deferral of payments also fell into arrears right after the assistance period ended.
“For people who reach out to their lender to signal they need support, this can be devastating. Too many Australians in financial hardship are finding it hard to get help from their lenders and it’s time for meaningful improvement,” said Chair Joe Longo.
“This report highlights lenders must improve the way they deal with customers experiencing hardship. What we have seen is simply not good enough – struggling customers deserve the right support in their time of need.”
In August last year, ASIC sent out a letter to the CEOs of lenders, saying that they need to meet their obligations to customers experiencing financial hardship.
Guidance on the experienced provider pathway for financial advisers
Information Sheet 281 FAQS: Relevant providers – Accessing the experienced provider pathway has been released to help financial advisers and AFS licensees learn about the experienced provider pathway. All qualifications on eligibility can be found here.
Investment Scam Fusion Cell report
The National Anti-Scam Centre (NASC) has released a report from its Investment Scam Fusion Cell project, which was designed to identify and block investment scam campaigns and their enablers, and to pinpoint barriers to better prevent and disrupt scams.
The Fusion Cell was co-led by ACCC (Australian Competition and Consumer Commission) and ASIC, and ran between August 2023 and February 2024.
During the period, the Key Fusion Cell managed to:
- establish a direct referral process to takedown scam advertisements, advertorials, and videos – which resulted in more than 1,000 instances were removed;
- take down over 220 investment scam websites ; and
- dicert 113 attempted calls to confirmed scam phone numbers to a recorded warning.
A Scamwatch feature was also introduced, and a handbook on disruption strategies to identify and combat AI trading platform scams was created.