Australian regulator suspends AFS licence of KP International Group
ASIC has suspended the Australian financial services licence (AFSL) of KP International, until 23 September, 2020, in response to the watchdog's concerns about KP International not adequately addressing systemic issues identified by the Financial Ombudsman Service.
The concern was over certain exclusions in the Sydney-based firm's professional indemnity insurance cover which did not meet adequacy requirements.
The FOS identified at least 23 KP clients who were affected by systemic issues and they did not review the relevant client files to determine if they had engaged in misconduct, assess whether remediation was necessary, or take reasonable steps to provide any required remediation.
Due to this, ASIC determined that KP International had failed to take all necessary steps 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.
The regulator notes that 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.
KP International, a Sydney-based financial services provider, is required to remain a member of AFCA and to obtain adequate professional indemnity insurance during the licence suspension period.
KP International may apply to the Administrative Appeals Tribunal for a review of ASIC's decision.
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