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The Administrative Appeals Tribunal has upheld ASIC’s decision to deny a chartered accountant a limited AFS license for failing to provide all relevant information for approval, including cash flow projections and satisfying knowledge requirements.
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Accountant’s appeal knocked back by AAT
10 January 2019
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In an AAT hearing last month, the tribunal found that Michael David Watson did not provide all the relevant information that ASIC requires to appropriately assess and grant a licence.
On 30 June 2016, Mr Watson applied for a limited AFS license to provide financial product advice in relation to SMSFs, among other financial products.
On October 2017, ASIC refused his application, leading to Mr Watson to appeal the decision to the AAT.
At the time of the application, Mr Watson was a director and shareholder of Advali Accountants Pty Ltd, previously known as Watson Finance Pty Ltd, and before that, Pancontinental Financial Advisers Pty Ltd.
He holds a Bachelor of Commerce University of Western Australia, a graduate Diploma of Chartered Accounting from the Institute of Chartered Accountants in Australia and a Diploma of Financial Planning from Mentor Education AU.
From 23 January 2015 to 11 May 2016, Mr Watson was an authorised representative of Merlea Investments Pty Ltd.
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The AAT was not satisfied with the information provided by the applicant including cash flow and other financial information and deemed that it did not comply with the regulations and the act and that therefore the application was not made in accordance with section 913A of the act.
The tribunal also found that the applicant had failed to provide sufficient information, either compliant in the regulations or otherwise, to enable it to be reasonably comfortable that he had adequate financial resources for the purposes of section 912A(1)(d) of the act.
Mr Watson had also sought to rely on his Diploma of Financial Planning from Mentor Education to satisfy the training requirement, with ASIC contending that the diploma does not adequately cover the knowledge requirements for SMSFs.
The tribunal agreed with ASIC’s assessment and noted that it was not satisfied with the applicant had demonstrated that he held the required knowledge in relation to SMSFs merely from having been appointed a representative of Merlea.
“While the tribunal accepts that the applicant has been a chartered accountant for many years and, as far as is known to the tribunal, has not had any issues with regulators or professional bodies relating to his practice as an accountant, the circumstances surrounding the matters raised by ASIC and the context in which those events occurred does indicate either a lack of care, or understanding by the applicant of the strict and technical nature of his obligations, or potentially, an attitude that the act and the regulations do not need to be strictly complied with,” said Tribunal deputy president Stephen Boyle.
The tribunal did knock back ASIC’s reason to deny Mr Watson an AFSL because he was not of good fame and character, noting there was no reason to believe so.
ASIC senior executive Warren Day welcomed the AAT’s decision and said it was a reminder to the industry to meet all relevant information that it requests.
“We welcome the AAT’s decision which supports the decision of our own delegate. ASIC is not simply a rubber stamp. We need applicants to provide all relevant supporting information, rather than just insisting what they have chosen to provide is adequate,” said Mr Day.
“The applicant must be able to demonstrate that educational courses they seek to rely on, cover the appropriate technical content needed to operate the licence.”
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