ASIC cancels another AFSL on the back of CSLR payment

The Australian Securities and Investments Commission (ASIC) has announced that it cancelled the Australian Financial Services Licence (AFSL) and Australian Credit Licence (ACL) of Ultiqa Lifestyle Promotions Limited, which is in liquidation.

On 28 June 2024, the Australian Financial Complaints Authority (AFCA) made a determination against Ultiqa, which Ultiqa failed to pay.

Subsequently, on 2 October 2024, the Compensation Scheme of Last Resort (CSLR) paid $19,429.60 to a person for AFCA’s determination and notified ASIC.

As a result, ASIC cancelled Ultiqa’s AFS and credit licences on 16 October 2024.

Under the CSLR rules, where the CSLR pays compensation to an eligible consumer in relation to an AFCA determination and notifies ASIC of the details of the firm that failed to pay the compensation, ASIC must cancel the AFSL of the firm.

The CSLR can pay up to $150,000 in compensation to consumers who have an unpaid determination from AFCA relating to authorised personal financial advice, credit intermediation, securities dealing or credit provision, and where other eligibility criteria are met.

All reasonable steps to obtain compensation from the financial firm must be taken before a CSLR payment can be made.

ASIC has previously taken regulatory action in relation to Ultiqa, having commenced proceedings against the firm in November 2021.

On 17 May 2022, the Federal Court found that between October 2017 and March 2019, financial advisers acting as authorised representatives of Ultiqa advised consumers to invest in the Ultiqa Lifestyle Scheme, a timeshare scheme, despite such advice not being in the consumers’ best interests and not being appropriate to their circumstances.

This is also not the first time that an unpaid AFCA determination and subsequent CSLR payment have led to an AFSL being cancelled, with the corporate regulator taking the action against Libertas in August.

Libertas, which was acquired by Sequoia Financial Group in August 2019, went into liquidation in May 2023. In a statement at the time, Sequoia said it planned to consolidate AFS licences, with management making the decision to transfer Libertas’ operations and customers to InterPrac Financial Planning and Sequoia Wealth Management.

The former dealer group is now managed by an external company.

An AFCA determination had previously been made against Libertas on 24 July 2023, but this was not paid by the firm. As a result, the CSLR paid an unspecific amount of compensation to the person on 24 July 2024 and notified ASIC, which prompted the cancellation.