The Australian Securities and Investment Commission (ASIC) has completely withdrawn the AFC license it gave to KP International Group. The company, which offers financial services in Australia, has been having a series of systemic issues.
ASIC earlier suspended the License of KP until September 23 when the company couldn’t resolve its internal issues and failed to provide adequate indemnity insurance cover.
But ASIC turned the suspension into cancellation when the commission received the latest update. The commission gathered that the top officers of KP resigned after the suspension, making it unable to carry out its principal role as a financial services provider. As a result, ASIC has no option than to withdraw its license completely.
Why KP lost its license
ASIC accused KP International of failing to make sure that it delivers on its promises to offer financial services. The commission reiterated that the company did not offer the services based on which license were given. As a result, ASIC has canceled KP International’s license and prohibits the company from offering any further services to clients.
Also, the commission said that AFCA had received multiple reports from people that a company is fronting as KP International Group offshore. But ASIC said it does not have any idea about the activities of these groups or those reporting the matter to AFCA.
AFCA said it does not have jurisdiction or control over complaints from financial firms that are not its members. Even though KP International is still a member of AFCA, it’s unlikely that the platform fronting as KP is an AFCA member.
However, AFCA has promised that it’s going to make inquiries. It warned clients to desist from any institution alleging to be KP International Group or having a link with them. The commission told clients to be patient not to make a wrong investment decision on the company until the whole license issue is sorted out.
What this means to clients
With the suspension, customers would no longer be able to carry out any business with KP international Group. Already, so many have withdrawn their patronage of KP after ASIC issued the suspension to the company in November.
The commission has already identified 23 clients of the company that were directly affected by the systemic issues of the company. But there was no review on the files of the clients to find out whether the company had engaged in misconduct or provided a remedy to the situation.
A way back for KP International
KP cannot do anything now to regain its license. But the company can appeal only when it gets the reason for cancellation sorted out. If KP does that, it can send an appeal to the Administrative Appeals Tribunal to review ASIC’s decision.
Getting back the license would be very difficult, but it would not be as difficult as getting back its clients. Most of KP’s clients have joined another service provider. Even if some want to come back after the company regains the license, it would be a very tiny fraction of its previous clients. According to experts, the most difficult thing is to gain back the trust of clients.