The corporate regulator revealed that it has cancelled two financial services licences, one due to the absence of legally required insurance cover and the other for “misleading” business practices.
The Australian Securities and Investments Commission (ASIC) announced that it had cancelled the Australian financial services (AFS) licences of Hobart-based CWS Mortgage and Melbourne-based Freedom Financial Consultants.
The action against CWS, which operated the managed investment scheme CWS Mortgage Fund, was taken because it had not held professional indemnity insurance since 15 September 2017, and was likely to continue not having legally required insurance cover due to unsuccessful attempts at obtaining such cover, ASIC said.
Under the Corporations Act 2001, AFS licensees are required to have professional indemnity insurance cover so that they can compensate retail clients for losses incurred as a result of a breach of obligations by the licensee or its representatives.
“ASIC considered that CWS was not providing retail clients the statutory protection required by the law,” the regulator’s announcement stated.
The corporate watchdog filed an application in the Federal Court earlier this year seeking orders and directions to close the CWS Mortgage Fund.
ASIC also said that under the terms of the licence cancellation, CWS is able to continue limited operations until 21 June 2020 to facilitate the closure of the fund.
The cancellation of Freedom Financial Consultants’ AFS licence is due to its founder Wayne Saman engaging in business practices that ASIC considered to be “fraudulent, misleading or otherwise improper”.
The regulator has also permanently banned the Melbourne-based broker from engaging in further credit activities.
The action taken against Mr Saman followed an investigation into the broker’s conduct in relation to two home loan applications that were submitted to Auswide Bank for a family member and “a close relation” in December 2016 and September 2017, ASIC noted.
“ASIC’s investigation found Mr Saman was not of good fame and character and was not a fit and proper person to engage in credit activities because he knowingly submitted incorrect documents and information concerning the applicant’s financial situation in the loan applications,” the regulator’s announcement stated.
“Mr Saman also failed to disclose that he had a personal relationship with the applicants. The failure to disclose the applicant’s correct financial situation and his personal relationship was intentional, untruthful and resulted in unjust benefits and exposure to additional risks.”
ASIC said it also found that Freedom Financial Consultants had failed to disclose in its 2018 Annual Compliance Certificate that Mr Saman’s accreditation and membership with Auswide Bank was cancelled in December 2017, and that his accreditation with the aggregator Custom Equity Group was terminated in February 2018.
Mr Saman will appear on ASIC’s publicly available Banned and Disqualified Persons Register.
[Related: ASIC takes action against three brokers]
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