Allegra Financial Services Pty Limited

Allegra Financial Services Pty Limited (Allegra) sought an Australian Financial Services Licence (AFSL) from the Australian Securities and Investments Commission (ASIC). ASIC, through its delegate, refused to grant the licence. Allegra subsequently sought a review of this decision before the Tribunal. The dispute centred on ASIC's concerns regarding the circumstances of Mr Schonfelder's departure from a previous employer, Carnbrea & Co Ltd, and the adequacy of Mr Schonfelder's disclosures to ASIC about these circumstances.

The primary legal issue before the Tribunal was whether it was satisfied that there was no reason to believe Allegra was likely to contravene its obligations under section 912A of the Corporations Act 2001 (Cth), as required by section 913B(1)(b) of the Act. This involved assessing the suitability of Mr Schonfelder, the principal of Allegra, to conduct a financial planning business and the adequacy of Allegra's proposed compliance arrangements.

The Tribunal affirmed ASIC's decision to refuse the AFSL. The Tribunal found that Allegra's proposed reliance on third-party arrangements to manage its compliance obligations was insufficient, particularly given serious concerns about Mr Schonfelder's suitability for the role. The Tribunal applied the principle that compliance arrangements involving third parties can only be effective if the key individuals within the organisation are themselves appropriate. It also adopted the view that regulators and tribunals should not be overly eager to permit regulated activity where there are significant concerns about an applicant's suitability.

Consequently, the Tribunal affirmed the decision made by ASIC's delegate on 15 July 2019 to refuse Allegra's application for an Australian Financial Services Licence.