<p> The Australian Securities and Investments Commission (<a href=”https://www.financemagnates.com/tag/asic/” target=”_blank” rel=”follow”>ASIC</a>) 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).</p><p>AFS Licenses Suspension and Cancellation</p><p class=”MsoNormal”>QMFL, which license was suspended, was operating four managed investment schemes. <a href=”https://www.financemagnates.com/terms/a/asic/” target=”_blank” id=”dfb41d67-b79e-4b09-b365-1f341b85a51b_2″ class=”terms__main-term”>ASIC</a> 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.</p><p class=”MsoNormal”>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.</p><p class=”MsoNormal”>A case involving <a href=”https://www.financemagnates.com/tag/american-express/” target=”_blank” rel=”follow”>Amex </a>seems decidedly more interesting.</p><p>American Express Australia in Court Over Credit Cards Distribution</p><p class=”MsoNormal”>According to a press release from 6 December 2022, the regulator has begun court proceedings against American Express <a href=”https://www.financemagnates.com/tag/australia/” target=”_blank” rel=”follow”>Australia </a>in its first civil penalty case regarding the violation of distribution and credit card design duties.</p><p class=”MsoNormal”>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.</p><p class=”MsoNormal”>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.</p><p class=”MsoNormal”>”The design and distribution <a href=”https://www.financemagnates.com/terms/o/obligations/” target=”_blank” id=”5dbcbf88-8622-4828-a29c-70a680d32fb5_1″ class=”terms__secondary-term”>obligations</a> 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.</p><p class=”MsoNormal”>ASIC is asking the <a href=”https://www.financemagnates.com/tag/court/” target=”_blank” rel=”follow”>court </a>to impose financial fines on Amex.</p>
This article was written by Damian Chmiel at www.financemagnates.com.
