ASIC Stops Two AFS Licenses, Takes American Express to Court

The Australian Securities and Investments Commission (ASIC) enforced regulatory actions against three companies on Tuesday. The financial market watchdog suspended the Australian financial services (AFS) license of Quantum Funds Management Limited (QFML), cancelled AFSL Group Pty Ltd (AFSL Group) authorization and took civil penalty action against American Express Australia Limited (Amex).

AFS Licenses Suspension and Cancellation

QMFL, which license was suspended, was operating four managed investment schemes. ASIC ASIC The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the Read this Term says the company does not have adequate liability insurance to offer such products. Following the suspension, the entity can still provide the services necessary to liquidate the current schemes.

AFSL had its license entirely revoked due to the lack of financial reports for the financial years ended 30 June 2020 and 2021, and the lost membership in the Australian Financial Complaints Authority (AFCA) scheme.

A case involving Amex seems decidedly more interesting.

American Express Australia in Court Over Credit Cards Distribution

According to a press release from 6 December 2022, the regulator has begun court proceedings against American Express Australia in its first civil penalty case regarding the violation of distribution and credit card design duties.

Amex and the David Jones store chain offered co-branded credit cards. Amex should have prepared a Target Market Determination (TMD) to asses the correct distribution of the product and to examine the potential group of the relevant recipients. ASIC argues that the TMDs presented by the company did not limit distribution for people who wanted to make credit purchases with a card that earned loyalty points.

According to the regulator, the company was aware that the cancellation rate for David Jones cards was high, well above the cancellation rate for standard credit cards. In addition, Amex knew that the offer was confusing for some customers; they did not know whether they had applied for a credit or a loyalty card. For this reason, Amex should stop issuing credit cards, but it continued the process until 5 July 2022.

"The design and distribution obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term embed a consumer-centric approach for the issuers and distributors of financial products. Product providers must monitor and review whether consumers are receiving products consistent with their needs and cannot bring a 'set-and-forget mindset' to product governance. It is critical that providers respond to poor outcomes they identify by making changes," Sara Court, the Deputy Chair at ASIC, said.

ASIC is asking the court to impose financial fines on Amex.