How ASIC acts on some unlicensed activity, not all

Mike Taylor

Managing Editor and Publisher

30 April 2024

A financial services licensee has revealed how he contacted the Australian Securities and Investments Commission (ASIC) multiple times to report a person making unapproved use of Australian Financial Services Licenses (AFSLs) but the regulator chose not to act.

The licensee who declined to be named has provided Financial Newswire with copies of his correspondence with ASIC over three years together with his correspondence with the licensees whose AFSL numbers were used without authorisation.

The licensee was responding to Financial Newswire’s recent report that unlicensed advice pursued by ASIC had cost financial advisers and licensees nearly $4.5 million in the 2022/23 financial year and that the advice sector would be billed again for its action against Melissa Caddick in the current financial year.

He said he was angered be the fact that he held to AFSLs and paid sizeable levies to ASIC but the regulator had declined to act on the issues of unlicensed advice he had raised.

“I came across an unlicensed criminal using the AFSL of two real AFSL holders (identical to Melissa Caddick) and reported this criminal to the ASIC including the correspondence I had with the two AFSL holders – so did all the work for ASIC,” he said.

However, he said that after many email exchanges ASIC had declined to prosecute stating, “ASIC is not required to investigate every reported instance of misconduct”.

The ASIC correspondence sighted by Financial Newswire noted that the information provided by the licensee had been filed and might be used at some point in the future.

“We have reviewed your report of misconduct, including information you provided against our regulatory requirements and made inquiries of our confidential databases,” ASIC’s response said.

“Based on the information available, ASIC has decided not to take any action at this time. We have considered your correspondence and reviewed our previous decision and will not be investigating the alleged misconduct. ASIC is not required to investigate every reported instance of misconduct.”

“The information that you have provided has been recorded on ASIC’s confidential internal database. Should further information be identified that suggests regulatory action is required this information will be available for consideration.”

At the time, the licensee responded to ASIC describing its position as “staggering” and a “complete joke” and went on to say “given what I am forced to spend to fund the ASIC and be compliant under my own AFSL. No wonder Melissa Caddick got away with her fraud for so long”.

“I will be submitting this letter and all my correspondence to the Senate Inquiry,” he told ASIC in reference to the Senate Economics Committee review of ASIC .