December 3, 2018
ASIC has cancelled the financial services licence of a Melbourne based advice business that offered life insurance linked to personal loans, a month after it was hit with a multi-million dollar penalty for breaching financial services laws.
The regulator stated it had cancelled the Australian financial services licence (AFSL) and Australian credit licence (ACL) of Financial Circle after the Federal Court ordered the business be permanently restrained from carrying on a financial services business, providing credit or entering into a credit contract as a credit provider.
In making the order, the Federal Court found that Financial Circle breached a number of financial services laws and obligations, including engaging in unconscionable conduct and failing to act in its clients’ best interests. The Court also ordered that Financial Circle pay a penalty of $8.9 million in regards to the breaches (see: Advice Group Hit With $9 Million Penalty).
At the time of the Federal Court orders, ASIC stated Financial Circle offered personal loans that could only be obtained if a consumer agreed to receive and implement financial advice, which typically recommended purchasing life insurance and switching superannuation providers, and where Financial Circles was paid fees from the superannuation fund as well as receiving commissions from life insurers.
ASIC stated that since Financial Circle had ceased to carry on its financial services and credit business, as a result of the Court order, it had cancelled its financial services licence, issued in 2006, and its credit licence, issued in 2011.
The regulator first stopped Financial Circle from offering any form of financial services in January 2018 (see: ASIC Stops Melbourne-based Business Providing Advice) and the licence cancellations became effective on 19 November 2018.