The Administrative Appeals Tribunal (AAT) has granted a stay of a decision by ASIC to cancel the Australian financial services licence (AFS licence) held by Melbourne-based company, Romad Financial Services Pty Ltd (RFS).

On 24 October 2011, RFS applied to the AAT for a review of ASIC’s decision and requested an order be made staying ASIC’s decision until the determination of the review.

Following an interlocutory hearing, the AAT granted a stay of ASIC’s decision subject to a number of conditions, including:

• RFS not authorise any new authorised representatives until the determination of the review
• the authorised representatives of RFS not engage any new clients until the determination of the review
• RFS maintain all professional indemnity insurance until the determination of the review, and
• RFS notify its’ professional indemnity insurer of any complaints made against it in the period of the review.

The AAT hearing has been listed to be heard during the week commencing 5 December 2011.

Background

ASIC cancelled RFS’ AFS licence on 19 October 2011 due to concerns that RFS had not complied with its obligations as a financial services licensee and would not, in the future, comply with financial services laws.

In particular, ASIC’s investigation found RFS had:

• failed to ensure that its authorised representatives complied with the financial services laws. In particular, RFS failed to monitor (such as, by obtaining independent verification) various statements on the websites operated by its authorised representatives
• failed to lodge with ASIC its annual financial statements and auditor’s reports by the required date for the 2007, 2008, 2009 and 2010 financial years
• failed to comply with a condition of its AFS licence to lodge with ASIC an auditor’s opinion by required date for the 2007, 2008, 2009 and 2010 financial years, and
• failed to advise ASIC of a significant breach relating to the failure to lodge its financial statements and auditor’s reports by the date of compliance regarding the 2008, 2009 and 2010 financial years.

RFS’ business involved authorising individuals and companies to provide financial services under its AFS licence that included the provision of financial product advice, and the dealing in financial products includingdeposit and payment products, derivatives, foreign exchange contracts, debentures, stocks, bonds, life products, interests in managed investment schemes, retired savings accounts products, securities and superannuation.

No findings have been made by ASIC about the conduct of any of these authorised representatives.

Editor's note:

On 24 November 2011 RFS withdrew its application for review to the Administrative Appeals Tribunal.