Customers of Berndale Capital Securities can continue to file complaints with AFCA

The Australian Financial Complaints Authority (AFCA) has set up a special page for customers of Berndale Capital Securities Pty Ltd, whose AFS license was cancelled by the Australian Securities & Investment Commission (ASIC) in November last year.

AFCA is aware that ASIC has obtained freezing orders from the Federal Court against Berndale and its principals.

The regulator suspects that Berndale and its ex-director Stavro D’Amore may have breached client money obligations, and contravened other laws. Berndale was a retail OTC derivative issuer and its Australian Financial Services licence was cancelled on November 22, 2018. At the same time, Mr D’Amore was banned from providing financial services for a period of six years.

Berndale and ASIC appeared before Justice O’Callaghan in the Federal Court in Melbourne on December 19, 2018, following ASIC’s initial application and interim orders.

The matter is next before the Federal Court on a date to be fixed in February 2019.

Let’s recall that ASIC found that Berndale:

• failed to take reasonable steps to ensure that its representative complied with financial services laws;
• failed to have adequate financial and human resources;
• failed to maintain an appropriate internal dispute resolution system;
• failed to provide financial services efficiently, honestly and fairly;
• failed to comply with the client money reporting requirements;
• failed to lodge annual financial statements, and audit reports; and
• is likely to contravene its general obligations as an AFS licensee.

ASIC also found Mr D’Amore:

• was involved in contraventions of financial services laws by Berndale;
• is not adequately trained, or is not competent, to provide financial services; and
• is likely to contravene a financial services law.

Berndale’s bank accounts are now frozen and it is unable to sell or otherwise deal with its property without ASIC’s consent.

Berndale, however, remains a current member of AFCA. This arrangement will continue until at least May 23, 2019. This means that consumers can continue to lodge complaints about Berndale’s conduct and services with AFCA.

AFCA will continue to consider and handle complaints against the financial firm.

At this stage, given the current ASIC investigations and the freezing of Berndale’s assets, AFCA is unable to advise about the status of client’s funds and return of funds to clients or other compensation that may be payable. Possible outcomes may also include Berndale being placed into liquidation and/or receivership. The body is currently investigating any professional indemnity insurance cover that Berndale may have.