ASIC has cancelled the Australian financial services (AFS) licence of Australian Public Trustees Limited (APT) after it was found they had breached a number of the financial, reporting and other obligations of a financial services licensee.

APT's licence authorised it to operate managed investment schemes and act as a responsible entity, among other things. It operated two such schemes, both of which invest in direct real property.

ASIC surveillance found that APT failed to:

• comply with the financial conditions of its licence, and

• lodge audited financial reports on time for APT and the schemes it operated.

Commissioner Greg Tanzer said that to help ensure confident and informed investors, schemes wanting to take on the responsibility of managing investors’ money must be backed by REs with appropriate financial substance.

'ASIC imposes financial conditions on licensees to help ensure that they have adequate financial resources to provide the services covered by their licence. ASIC will not hesitate to take action where licensees fail to meet these requirements' Mr Tanzer said.

‘Companies also have obligations that are central to ensuring the transparency and accountability of the reporting process. These obligations must be complied with to ensure users of financial reports like unit holders and creditors have the information available to help them make informed decisions.’

APT has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.

Background

The cancellation of APT's AFS license is effective 18 July 2013. This is subject to a condition that the licence continues in effect until 30 June 2014 for the purpose of providing financial services necessary to transfer the schemes to a new responsible entity, or for the winding up of the schemes.

ASIC initially suspended APT's AFS licence authorisations (other than for the purpose of operating the two registered managed investment schemes) on 15 August 2012 on the basis that it had failed to comply with the financial conditions of its licence, and lodge accounts on time. ASIC suspended the licence to allow time for APT to find a commercial solution to issues facing the schemes it operates for the benefit of the investors in those schemes and rectify the breaches.

Australian Public Trustees Limited’s services included issuing, acquiring and disposing of interests in managed investment schemes.

The financial resource requirements for responsible entities of managed investment schemes are detailed in Regulatory Guide 166 Licensing: Financial requirements (RG 166).