ASIC has cancelled the Australian financial services (AFS) licence of Hobart-based CWS Mortgage Ltd (CWS). CWS operated the CWS Mortgage Fund ARSN 094 313 096 (Fund), a registered managed investment scheme.
The licence cancellation took effect on 26 June 2019.
ASIC took this action because CWS had not held professional indemnity insurance since 15 September 2017. Moreover, CWS was likely to continue to not have the required insurance cover because it was unsuccessful in its attempts to obtain the required cover. As a result, ASIC considered that CWS was not providing retail clients the statutory protection required by the law.
Under the Corporations Act 2001, AFS licensees must have arrangements in place for compensating retail clients for losses they suffer as a result of a breach of obligations by the licensee or its representatives. These arrangements must generally include professional indemnity insurance cover that is adequate and takes into account the nature of the licensee’s business and potential liability for compensation claims.
CWS commenced winding up the Fund on 31 October 2016. It filed an application in the Federal Court seeking orders and directions to wind up the Fund on 17 May 2019.
Under the terms of the licence cancellation, CWS can continue limited operations until 21 June 2020 to facilitate the winding up of the Fund.
CWS Mortgage Ltd has held AFS licence 244391 since 7 January 2004. Under the Corporations Act, ASIC has the power to suspend or cancel an AFS licence if a licensee does not comply with the law, and/or if ASIC has reason to believe a licensee is likely to contravene its legal obligations.
CWS has the right to seek a review of ASIC’s decision from the Administrative Appeals Tribunal.