The Australian Securities and Investments Commission (ASIC) has cancelled the Australian financial services licence (AFSL) of Libertas Financial Planning Pty Ltd, a former national financial advisory firm currently in liquidation. This marks the first instance of ASIC revoking an AFSL following a compensation payout by the Compensation Scheme of Last Resort (CSLR).
The CSLR, established in June 2023 and operational since April 2024, provides compensation of up to £95,000 to consumers who have unpaid determinations from the Australian Financial Complaints Authority (AFCA) for services such as personal financial advice, credit intermediation, securities dealing, or credit provision. Eligibility requires meeting specific criteria.
Consumers must first exhaust the AFCA complaint process before filing a claim with the CSLR. Furthermore, they must demonstrate that they have taken all reasonable steps to secure compensation from the financial firm in question before the CSLR will make a payment.
The CSLR's role in this situation is crucial. Once it pays compensation to an eligible consumer based on an AFCA determination, the scheme is obligated to inform ASIC of the firm's failure to meet its financial obligations. This notification triggers an automatic cancellation of the firm's AFSL, with no room for discretion or review.
In the case of Libertas, AFCA made a determination against the firm on 24 July 2023, which Libertas failed to honour. Subsequently, on 24 July 2024, the CSLR paid compensation to an affected individual based on the AFCA determination and promptly notified ASIC. As a result, ASIC cancelled Libertas' AFSL on 14 August 2024, as per the established procedure.
This action underscores the CSLR's vital role in safeguarding consumers by holding financial firms accountable for their obligations. The automatic AFSL cancellation mechanism strengthens consumer protection and ensures swift consequences for firms that fail to meet their financial commitments.
