AAT affirms ASIC decision not to issue limited AFSL for SMSF advice

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ASIC says those applying for limited AFSLs are on notice to disclose all relevant information. This comes after the Administrative Appeals Tribunal upheld a decision by ASIC not to issue a limited AFSL covering SMSF advice, in part because past breaches of law were not disclosed.

In April 2014 Superannuation Warehouse Australia Pty Ltd applied for a limited Australian Financial Services licence to give financial product advice relating to SMSFs. This application was refused by ASIC in June 2016, a decision which was appealed to the AAT in July 2016.

A ruling by the AAT late in January 2019 upheld the decision by ASIC: Superannuation Warehouse Australia Pty Ltd and Australian Securities and Investments Commission [2019] AATA 88.

ASIC says the AAT had found the sole director and nominated Responsible Manager for Superannuation Warehouse, Johann Heinrich Preller, had failed to demonstrate “an adequate understanding of the general obligations that would apply to a licensee” and “failed to disclose matters that the AAT considered were materially relevant; including a failure to disclose past breaches of other laws to ASIC”.

In 2015 the Federal Court of Australia ordered Superannuation Warehouse to pay $25,000 for false and misleading “Free SMSF Setup” advertising.

ASIC says that the AAT also took into account information referred to ASIC from the ATO about SMSF audits by Mr Preller.

The statement by ASIC pointed to another ruling by the AAT affirming ASIC’s decision not to issue a limited AFSL. ASIC Executive Director of Assessment and Intelligence Warren Day said: “These decisions reinforce the importance of providing full and frank disclosures to ASIC and the weight placed on an applicant’s past conduct in financial services or under other legislation in determining a licence application.”

“Applicants, and anyone else involved in preparing and lodging applications with ASIC, are on notice that a failure to disclose all relevant information runs the risk of the application being refused,” he said.

“While some applicants may be relatively new to the licensing regime, we emphasise that granting a licence is a privilege and not a right and that making a false or misleading statement in a licence application may result in a criminal prosecution. Further, if we find out after we have granted a licence, we may cancel it, or seek other remedies.”

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