ASIC takes action against two AFS licencees

ASIC has taken action to cancel the Australian financial services (AFS) licence of the AFSL Group and to suspend that of Quantum Funds Management Limited (QFML), it confirmed in two separate notices on Tuesday.

Regarding its decision to cancel the licence of the AFSL Group, the corporate regulator said it found that the AFSL Group failed to lodge its financial statements and audit reports for the financial years ending 30 June 2020 and 30 June 2021, and to maintain membership in the Australian Financial Complaints Authority (AFCA) scheme.

The cancellation took effect on 2 December 2022.

“Licensees are required to lodge financial statements and audit reports with ASIC to demonstrate their capacity to provide financial services. Failure to comply with reporting obligations can be an indicator of a poor compliance culture,” ASIC said.

Moreover, the regulator explained that where licensees fail to maintain external dispute membership, ASIC will take action to cancel or suspend their licence.

Since ASIC’s surveillance, AFSL Group has applied for reinstatement of its AFCA membership.

Regarding its decision to suspend the AFS licence of QFML until 15 October 2023, ASIC said the firm did not have the required professional indemnity insurance coverage.

QFML is the responsible entity for the following registered managed investment schemes: Quantum Mortgage Trust, Quantum Residential Property Trust, Quantum USA Residential Property Fund, and Quantum Strata Scheme No. 14.

According to the corporate regulator, the licence suspension allows QFML to provide financial services that are reasonably necessary for, or incidental to, the winding up of the schemes, except for Quantum Strata Scheme No. 14 (Scheme 14), which is not being wound up. Investors in Scheme 14 are being urged to contact QFML for further information.

Under the suspension, QFML is required to have a dispute resolution system in place through its membership in the AFCA.

Both QFML and AFSL Group may apply to the Administrative Appeals Tribunal for a review of ASIC’s decision.