ASIC has suspended the Australian financial services (AFS) licence of Sydney-based financial services provider KP International Group Australia Pty Ltd (KP International) until 23 September 2020.
The licence was suspended because ASIC was concerned that KP International did not adequately address systemic issues identified by the Financial Ombudsman Service (now Australian Financial Complaints Authority or AFCA), and that certain exclusions in KP’s professional indemnity insurance cover did not meet minimum adequacy requirements.
Specifically, the Financial Ombudsman Service identified that at least 23 clients of KP International were affected by systemic issues. However, KP International did not:
- review the relevant client files to determine whether it had engaged in misconduct
- assess whether remediation was necessary; or
- take reasonable steps to provide remediation where required.
As a result, ASIC determined that KP International had failed to do all things necessary to ensure that the financial services covered by its licence were provided efficiently, honestly and fairly. ASIC also found KP International’s professional indemnity insurance cover had exclusions that made it inadequate for the licensee’s business and any liabilities arising from potential compensation claims.
ASIC expects licensees to address concerns raised by AFCA in a timely manner and remediate clients where necessary. Licensees are expected to have appropriate professional indemnity insurance cover to be able to compensate clients who suffer losses due to a breach of financial services obligations by either the licensee or its representatives.
KP International is required to remain a member of AFCA and to obtain adequate professional indemnity insurance during the licence suspension period. The period of suspension will allow the licensee to make all necessary changes to address ASIC’s concerns.
The suspension of KP International’s AFS licence is part of ASIC’s ongoing efforts to improve standards across the financial services industry.
KP International may apply to the Administrative Appeals Tribunal for a review of ASIC’s decision.
KP International has held AFS licence no. 334191 since 15 February 2011.