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ASIC has suspended the Australian financial services (AFS) licence of Sydney-based financial services provider KP International Group Australia Pty Ltd (KP International) until 23 September 2020.
The licence was suspended because the regulator was concerned that KP International did not adequately address systemic issues identified by the Financial Ombudsman Service (FOS now AFCA), and that certain exclusions in KP’s professional indemnity insurance cover did not meet minimum adequacy requirements.
Specifically, the FOS identified that at least 23 clients of KP International were affected by systemic issues. ASIC determined that KP International had failed to do all things necessary 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.
ASIC expects licensees to address concerns raised by AFCA in a timely manner and remediate clients where necessary. 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.
The suspension of KP International’s AFS licence is part of ASIC’s ongoing efforts to improve standards across the financial services industry.
KP International may apply to the Administrative Appeals Tribunal for a review of ASIC’s decision.
ASIC is encouraging small businesses to contact their broker or insurer and ask whether their business interruption policy covers COVID-19 related losses.
ASIC consultation on implementing a deferred sales model for add-on insurance products
NIBA CEO, Dallas Booth has urged action on Design and Distribution Obligations (DDO) legislation
The Federal Court of Australia has found that TAL Life Limited breached its duty to act with utmost good faith under the Insurance Contracts Act