ASIC Suspends AFS Licence Over Lack of PI Cover


ASIC has suspended the Australian financial services licence of Perth-based financial advice provider Ballast Financial Management, until 18 December 2020, when it was unable to obtain professional indemnity insurance.

A statement from the commission says the licence was suspended because Ballast had ceased to carry on a financial services business.

ASIC says that under s915B of the Corporations Act 2001, it may suspend or cancel an AFS licence without offering a hearing if the licensee ceases to carry on the financial services business, and that Ballast ceased doing so “…when it was unable to obtain professional indemnity insurance to comply with its obligation to have adequate compensation arrangements”.

It states that AFS licensees must have arrangements for compensating retail clients for losses they suffer as a result of the licensee or its representatives breaching their obligations in Chapter 7.

ASIC says the 10-week suspension will give Ballast sufficient time to put in place adequate compensation arrangements.

“The suspension also provides Ballast an opportunity to identify and appoint an appropriately qualified and experienced responsible manager following the resignation of its previous responsible manager.”

The statement concludes that if Ballast is unable to demonstrate that it is in a position to recommence its financial services business by the end of the 10-week suspension, ASIC will consider cancelling its licence.

Ballast has held an AFS licence since 2003.