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The corporate regulator has cancelled the financial services licences of two firms for failing to obtain an AFCA membership.
The Australian Securities and Investments Commission (ASIC) has revoked the licences of two NSW-based accounting firms for no longer meeting obligations pertaining to membership of an external dispute resolutions (EDR) scheme.
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The firms were disqualified on 14 and 15 February after they failed to secure memberships of the Australian Financial Complaints Authority (AFCA), which commenced operations on 1 November 2018, replacing the Financial Ombudsman Service, the Credit and Investments Ombudsman, and the Superannuation Complaints Tribunal.
According to ASIC, both firms failed to lodge their annual financial statements with the regulator, with one firm subsequently taking steps to comply with financial reporting obligations after concerns were raised.
All AFS licensees, Australian credit licensees, superannuation trustees and other financial firms that provide services to retail clients were required to become members of AFCA by 21 September 2018.
ASIC issued several notices prior to the registration deadline and extended the deadline for credit representatives, including mortgage brokers that had lodged a membership application with AFCA but did not receive approval prior to the deadline.
Reflecting on ASIC’s decision, commissioner Danielle Press said: “These cancellations are significant because this is the first time ASIC has cancelled licences for non-compliance with AFCA membership requirements.
“AFCA is crucial to the protection of Australia’s financial consumers. Licensees need to be aware that failure to meet AFCA membership requirements is a serious breach of the law and ASIC will take action where licensees fail to meet this important obligation.”
[Related: ASIC provides last ditch ‘relief’ for AFCA transition]
