The Administrative Appeals Tribunal (AAT) has rejected an application from IMS FX Services Pty Ltd (IMS FX) that sought confidentiality orders and an interim order that prevented ASIC from amending the public Australian financial services (AFS) licence register to record that ASIC had cancelled IMS FX’s AFS licence.

The interlocutory application was made pending an AAT appeal to overturn ASIC’s decision to cancel its AFS licence, which is now awaiting listing by the AAT.

The AAT said, "In the circumstances, I am satisfied that there is considerable risk to the public if the Decision is stayed. I consider that there is considerable merit in ASIC’s submission that the asserted misleading character of the application made by the Applicant goes to the heart of the risk to the public of allowing the Applicant to continue under its AFSL.

"Furthermore, there is, as submitted by ASIC, a further aspect of the public interest which lies in the general deterrent effect of [ASIC] publicising the fact that an AFSL obtained by means of a materially misleading application has been cancelled - which supports the role of ASIC in carrying out its function of protecting the public.’

In light of the AAT’s decision, the AFS licence register will now reflect that IMS FX’s AFS licence has been cancelled.

Deputy Chairman, Mr Peter Kell said, 'It is paramount that any person seeking to obtain an AFS licence submits an application that accurately reflects the facts and circumstances as well as the financial services business the applicant intends to carry on under the licence.

'This should be a salient reminder to applicants that should any material circumstances surrounding the application change, the applicant has a responsibility to disclose this to ASIC to ensure that ASIC’s decision is made on a fully informed and accurate basis. A failure to do so risks ASIC taking regulatory action, including, as in this instance, ASIC deciding to cancel the licence.’

ASIC notes that its' decision in this case is consistent with the Commonwealth Government’s support of Recommendation 29 of the Financial System Inquiry – that ASIC approval should be required for any change in control of a licensee.

Background

On 25 March 2015, IMS FX lodged an application for an AFS licence which was granted on 16 September 2015. Subsequently, ASIC learned that the controllers of the licensee had reached an agreement on 7 August 2015 that IMS FX would be sold shortly after the licence is granted.

As the licence application did not disclose this intention to change ownership, directorships, intended business activities and resources, on 22 December 2015, ASIC convened a hearing to determine whether the licence should be cancelled.

The hearing took place on 3 February 2016 and an ASIC delegate found that the application lodged with ASIC was misleading in a material way and decided to cancel the licence.

The decision to cancel IMS FX’s licence was notified to the applicant on 24 February 2016. On 26 February 2016, IMS FX appealed ASIC’s decision and also sought to defer the effect of ASIC's cancellation order and confidentiality orders. An interlocutory hearing was held on 11 March 2016 and on 31 August 2016, the AAT made a decision rejecting IMS FX's interlocutory application.

Editor's note:

IMS FX subsequently withdrew their application with the AAT, with an effective date of 19 September 2015.