Australian regulator suspends AFS licence of KP International Group Australia Pty Ltd
ASIC is concerned that KP International did not adequately address systemic issues identified by the Financial Ombudsman Service.
The Australian Securities & Investments Commission (ASIC) today announces that it has suspended the Australian financial services (AFS) licence of KP International Group Australia Pty Ltd. The suspension is set to be in force until September 23, 2020.
The suspension is implemented in response to ASIC concerns about KP International not adequately addressing systemic issues identified by the Financial Ombudsman Service (now known as Australian Financial Complaints Authority or AFCA). Furthermore, the regulator was concerned that certain exclusions in KP’s professional indemnity insurance cover did not meet minimum adequacy requirements.
In particular, the Financial Ombudsman Service identified that at least 23 clients of KP International were affected by systemic issues. But 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.
Due to this, ASIC determined that KP International had failed to take all necessary steps 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.
The regulator notes that 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, a Sydney-based financial services provider, is required to remain a member of AFCA and to obtain adequate professional indemnity insurance during the licence suspension period. The period of suspension is poised to 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.
The firm may apply to the Administrative Appeals Tribunal for a review of ASIC’s decision.
