The Australian Securities and Investments Commission (ASIC) has cancelled the financial services licence of Lion Advantage Limited and banned its chief executive David Hickie for two years.
Lion Advantage provides financial product services to retail clients and acts as a responsible entity, operating four registered managed-investment schemes, which invest in real property.
The regulator found that Lion Advantage had breached a number of the financial, reporting and other obligations of a financial services licensee in contravention of the Corporations Act.
After a surveillance operation, ASIC also found that Hickie had not complied with financial services laws.
Specifically it found that Lion Advantage repeatedly failed to:
- have adequate professional indemnity (PI) insurance in place
- lodge audited financial reports on time for Lion Advantage and the schemes it operated, and
- hold membership of an ASIC-approved external dispute resolution (EDR) scheme in 2007 and for the period between October 31, 2011 and March 7, 2012.
Transgressions explained
“Companies have important obligations that are central to ensuring the transparency and accountability of the reporting process and must comply with their reporting requirements to ensure users of financial reports like shareholders and creditors have the information available to them to help them make informed decisions,” said ASIC commissioner Greg Tanzer.
“Licensees who fail to maintain adequate PI insurance expose retail clients to the risk that they go uncompensated in circumstances where a licensee has insufficient funds to meet client claims.
“EDR schemes are equally important as they provide consumers with alternatives to legal proceedings in respect of resolving complaints with their financial service providers.”
ASIC was also concerned that Lion Advantage and Hickie had failed to comply with the obligation to notify ASIC of significant breaches and did not have adequate compliance measures in place.
The cancellation of Lion’s AFS license is effective immediately and is subject to a specification that the licence continues in effect until December 31, 2012 so the company can provide the services necessary to either transfer schemes to a new responsible entity or wind them.
Hickie’s banning is effective from August 14, 2012.
Lion Advantage and Hickie have the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.
