Property investment firm loses licence

The licence, which has been held by Epic since 26 February 2004, was cancelled due to the fact that the company had not held professional indemnity insurance since 21 April 2021, despite many attempts to attain it.

As stipulated in the Corporations Act 2001, AFS licensees must have arrangements in place for compensating retail clients for losses they suffer as a result of obligation breaches undertaken by the licensee or its representatives.

Generally, these arrangements must include professional indemnity insurance cover that is adequate and takes into account the nature of the licensee’s business and potential liability for compensation claims.  

Consequently, ASIC delivered their verdict that Epic had failed to comply with its obligations as set out for AFS licensees, with the firm failing to comply with the regulatory guidelines for AFS licensees, which includes providing retail clients with customer protections.

The cancellation came into effect on 31 May 2022. Under the terms of the cancellation, Epic is still able to operate under its AFS licence on a limited basis until the end of 2022, but only for the purposes of:

• Providing financial services that are reasonably necessary for, or incidental to, the winding up of the schemes; and
• Ensuring that members and former members of the schemes continue to have access to an external dispute resolution scheme. 

ASIC explained that these conditions are in place to ensure current or past members are not heavily impacted by the firm’s licence cancellation.

ASIC has also detailed that Epic has the right to seek a review of the decision from the Administrative Appeals Tribunal.