The Australian Securities and Investments Commission (ASIC) announced that it has cancelled the AFSL of Viridian Equity Group Pty Ltd (Viridian Equity) following the Compensation Scheme of Last Resort (CSLR) making payments to clients.
On 31 October 2024, the Australian Financial Complaints Authority (AFCA) made three determinations against Viridian Equity, which Viridian Equity failed to pay.
Subsequently, on 11 March 2025, the CSLR paid three payments totalling $450,000 for the AFCA determinations and notified ASIC. As a result, on 17 April 2025, ASIC cancelled Viridian Equity’s AFS licence.
“Where the CSLR pays compensation to an eligible consumer in relation to an AFCA determination and notifies ASIC of the details of the firm that failed to pay the compensation, ASIC must cancel the AFS licence or credit licence of the firm,” the regulator said.
“The cancellation is not subject to discretion or merits review.”
The AFCA determinations against Viridian Equity relate to investments in a property development managed investment scheme, which subsequently failed and caused the complainants to lose between $150,000 and $400,000, depending on the case.
The complaints authority added that the project was restricted to wholesale clients or sophisticated investors.
“The financial firm incorrectly assessed the complainants as sophisticated investors. The complainants were ineligible to invest in the project. The financial firm should not have accepted their investment application,” AFCA wrote in one of the determinations.
Following the AFCA complaint process, ASIC noted that “all reasonable steps to obtain compensation from the financial firm must be taken before a CSLR payment can be made”.
However, this is not the first time that an unpaid AFCA determination and subsequent CSLR payment have led to an AFSL being cancelled, with the corporate regulator taking the action against Libertas in August 2024.
Libertas, which was acquired by Sequoia Financial Group in August 2019, went into liquidation in May 2023. In a statement at the time, Sequoia said it planned to consolidate AFS licences, with management making the decision to transfer Libertas’ operations and customers to InterPrac Financial Planning and Sequoia Wealth Management.
The former dealer group is now managed by an external company.
An AFCA determination had previously been made against Libertas on 24 July 2023, but this was not paid by the firm. As a result, the CSLR paid an unspecific amount of compensation to the person on 24 July 2024 and notified ASIC, which prompted the cancellation.
In October, ASIC also cancelled the AFSL and Australian Credit Licence of Ultiqa Lifestyle Promotions Limited on the back of a CSLR payment, while it also cancelled the AFSL of both DOD Bookkeeping and RPD Group Advice in November.
So once again, a listed company buys an advice firm. Transfers the clients to a new AFSL and then puts the company that owes the clients money into liquidation.
This is not what the CSLR is about.
As a small advice practice, why should we have to bail out the listed company when the listed company continues to keep these clients?
Why is PI not paying out? This question has not been answered. Is PI and its considerable cost fit for purpose anymore? Surely there must be some published metrics on the amount of claims paid out under PI, and as such we should question its viability in this industry.
I do not advise on investments
Why the hell should I pay to fund investors in FAILED INVESTMENT PRODUCTS
Property investment for a SMSF….of course clients would be classed as sophisticated or wholesale clients!
The system allows this and then the rest of the planners pay. Not a bad rort….. now all too common.
Forget the definition of retail, wholesale, or sophisticated clients…….advice is advice!!
Its all comes back to the onerous red tapes and reams of paperwork that could be as simple as a letter of advice.
All we are doing are giving the property and investment floggers a free pass to not back their advice…sorry sales pitches.
And it doesn’t stop with property, one needs to have a look at all the groups that are specialist wholesale spruikers for shares, portfolios and dare I say SMAs where the common denominator is “clipping the ticket” on related conflicted outcomes.
Yet ASIC, AFCA and the systems allows this to happen knowing that the CSLR is there to pay.
What about proactive enforcement?
What are “all reasonable steps” to obtain compensation from financial firm?
Don’t these AFSLs have PI insurance cover? why do they tap into CSLR?
Further:
1. Why did äll reasonable steps not get taken before they went into liquidation?
2. Why aren’t parent companies held responsible for the debts of subsidiaries they put into liquidation?
everyone one of these large payouts have been against failed property groups….and usually SMSF’s involved.
Another wholesale product failure, thrown into retail to tap the keg of the everyday adviser