ASIC has banned the CEO of a financial services company and cancelled the organisation’s AFS license.
Following a surveillance operation, the regulator has cancelled the license of Lion Advantage Limited and banned its chief executive, David Hickie, from providing financial services for two years.
Lion Advantage was described by ASIC as a company that provided financial product services to retail clients and acted as a responsible entity, operating four registered managed investment schemes which invested in real property.
However, the regulator found that Lion Advantage was failing to fulfil its obligations as a financial services licensee by repeatedly failing to:
have adequate professional indemnity (PI) insurance in place;
lodge audited financial reports on time for Lion Advantage and the schemes it operated; and
hold membership of an ASIC-approved external dispute resolution (EDR) scheme in 2007 and for the period between 31 October 2011 and 7 March 2012.
“Companies have important obligations that are central to ensuring the transparency and accountability of the reporting process and must comply with their reporting requirements to ensure users of financial reports like shareholders and creditors have the information available to them to help them make informed decisions,” said ASIC commissioner Greg Tanzer.
“Licensees who fail to maintain adequate PI insurance expose retail clients to the risk that they go uncompensated in circumstances where a licensee has insufficient funds to meet client claims. EDR schemes are equally important as they provide consumers with alternatives to legal proceedings in respect of resolving complaints with their financial service providers.”
Additionally, ASIC said that it was “concerned” that Lion Advantage and Hickie failed to comply with the obligation to notify ASIC of significant breaches, and did not have adequate compliance measures in place to ensure compliance with financial services laws.
Both Hickie and Lion Advantage can appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.