The Australian Securities and Investments Commission has canceled Libertas Financial Planning Pty Ltd’s license. According to the regulator’s announcement today (Monday), the firm’s cancellation of its Australian financial services license marks the first time the regulator has taken action under the newly operational Compensation Scheme of Last Resort (CSLR) in a compensation payout to a client.

Consumer Protection

The CSLR, which commenced operations in April 2024, was created to protect consumers who have suffered financial losses due to the misconduct of licensed firms but have been unable to recover compensation.

The scheme can reportedly pay up to $150,000 to eligible consumers who have an unpaid determination from the Australian Financial Complaints Authority (AFCA) relating to issues such as financial advice, securities dealing, and credit intermediation.

The regulator mentioned that it took this action as a result of AFCA’s determination against Libertas Financial Planning on 24 July 2023, which the firm failed to satisfy.

We have cancelled the Australian financial services licence of former financial advice business Libertas Financial, the first such cancellation following a payment of compensation by the Compensation Scheme of Last Resort https://t.co/jMMgjEGr6u

— ASIC Media (@asicmedia) August 19, 2024

Subsequently, the CSLR stepped in and made a compensation payment to the affected client on 24 July 2024. ASIC, in response, canceled the AFSL of Libertas Financial Planning on 14 August 2024, following notification from the CSLR.

Compensation Payment

Last month, ASIC took action against United Global Capital (UGC) and its Director. The regulator banned Joel James Hewish from the financial services industry for ten years and canceled UGC’s financial services license.

ASIC reportedly found that UGC’s authorized representatives engaged in questionable practices, including recommending that clients create self-managed superannuation funds and invest in speculative products related to Hewish.

In addition, ASIC recently issued a new guideline for unlicensed entities and AFS licensees. The regulation relates to unsolicited contact leading to financial advice. The regulation highlighted the legal responsibilities and compliance obligations for entities engaging in unsolicited and digital contact with consumers and underscored the need to follow financial services laws.

According to the regulator, entities facilitating financial transactions, influencing consumer decisions, or engaging in digital interactions related to financial advice require an AFS license or appropriate authorization.

Source