Anderson and Australian Securities and Investments Commission - [2022] AATA 339

Anderson and Australian Securities and Investments Commission [2022] AATA 339 (17 February 2022)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2021/5258
Re:Pamela Anderson
APPLICANT

AndAustralian Securities and Investments Commission
RESPONDENT

File Number(s): 2021/5270
Re:David Ruthenberg
APPLICANT

AndAustralian Securities and Investment Commission
RESPONDENT

DECISION
Tribunal:Deputy President Bernard J McCabe
Date:17 February 2022
Place:Melbourne

1.Pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975, the Tribunal orders that the operation of the reviewable decision in relation to Pamela Anderson is stayed until the review has concluded or until further order on condition that:
(a)the applicant undertakes that she will not provide financial advice to any new client pending the outcome of the review;
(b)The applicant undertakes that any financial advice she provides to existing clients pending the outcome of the review will be pre-vetted by a person with requisite qualifications and experience who is nominated by the holder of the relevant Australian Financial Services Licence;
(c)The applicant writes to each existing client to whom she has provided or will provide financial advice disclosing the fact of the regulatory action against her (including the application for review and the conditions attaching to the stay order) in a form approved by the respondent before the stay commences.

2.Pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975, the Tribunal orders that the operation of the reviewable decision in relation to David Ruthenberg is stayed until the review is concluded or until further order on condition that:
(a)the applicant undertakes that he will not provide financial advice to any new client pending the outcome of the review;
(b)The applicant undertakes that any financial advice he provides to existing clients pending the outcome of the review will be pre-vetted by a person with requisite qualifications and experience who is nominated by the holder of the relevant Australian Financial Services Licence; and
(c)The applicant writes to each existing client to whom he has provided or will provide financial advice disclosing the fact of the regulatory action against him (including the application for review and the conditions attaching to the stay order) in a form approved by the respondent before the stay commences.

3.The applications for orders under s 35 of the Administrative Appeals Tribunal Act 1975 are refused.
4.These reasons for decision will not be published (except to the parties and their legal representatives) for seven days from the present date.

...............................[SGD]....................................
Bernard J McCabe, Deputy President
Catchwords
PRACTICE AND PROCEDURE – STAY APPLICATION – application for stay of publication of banning order by the Respondent – where applicants were banned for 2 and 3 years – where publication of ban may impact vulnerable clients – whether publication may hurt cause reputational damage – objectives of the regulators in making a decision – where objective of legislation evince concern for consumer protection – objective of transparency – where there may be irrecoverable business loss – where there may be reputational damage – impact on business interests – confidentiality application refused – stay application granted
Legislation
Administrative Appeals Tribunal Act 1975 ss 35, 41
Corporations Act 2001 s 760A
Cases
Australian Securities and Investments Commission v Administrative Appeals Tribunal [2009] FCAFC 185
Australian Securities and Investments Commission v PTLZ [2008] FCAFC 164
Daly and Australian Securities and Investments Commission [2020] AATA 1516
Opus Capital Ltd and Australian Securities and Investments Commission (2010) 117 ALD 608
Re Pochi and Minister for Immigration and Ethnic Affairs (1979) 36 FLR 482
Rent-to-Own Australia Pty Ltd and ASIC [2011] AATA 689
Scott and Australian Securities and Investments Commission [2009] AATA 798
REASONS FOR DECISION
Deputy President Bernard J McCabe
17 February 2022

The applicants in these proceedings are both financial advisors who were caught up in the failure of a financial services’ group. A delegate of the Australian Securities and Investments Commission (ASIC) concluded the applicants should be banned from providing financial services for two years (in the case of Ms A) and three years (in the case of Mr R). The adverse findings against both applicants included:
(a)They contravened financial services laws;
(b)They were not adequately trained or competent; and
(c)ASIC had reason to believe they would contravene financial services laws in the future.
The reviewable decisions came into effect on 3 August 2021 after they were communicated to the applicants. Both applicants have approached the Tribunal for a review. While each review proceeds, the applicants have asked for orders in similar terms under ss 41(2) and 35 of the Administrative Appeals Tribunal Act 1975 (C’th) (the AAT Act). The orders under s 41(2) would stay the operation of the reviewable decision in each case so:
(a)the applicant would be permitted to continue working as a financial advisor pending the outcome of the proceedings, and
(b)ASIC would be restrained from issuing a media release or recording the reviewable decision in the statutory register. The order under s 35 would enable the applicants to have a private hearing without their names being mentioned in the press. The evidence given at the hearing would also go unpublished – and the reviewable decision would not otherwise be publicly discussed.
The applicants have both offered to give undertakings that might address some of the concerns ASIC has about a stay. ASIC opposes the orders under ss 41(2) and 35.
I heard from the parties at a hearing of stay on 3 February 2022. The applications of both applicants were dealt with at the same interlocutory hearing given the reviewable decisions were both premised on similar factual matrices. It was convenient to deal with both matters together, particularly as both parties were represented by the same counsel. It remains to be seen whether both matters will be heard together at the final hearing.
I am satisfied the reviewable decisions should be stayed pursuant to s 41(2) although I will only do so upon the parties each giving undertakings in appropriate terms. I am not satisfied those orders should extend, in either case, to restraining ASIC from publishing or otherwise discussing the reviewable decision or the proceedings. Such an order would probably be otiose in any event, given Mr Goodwin, counsel for ASIC, explained ASIC would refrain from making the entries in the register or issuing a media release in the event the reviewable decisions were stayed. I am not satisfied it is appropriate to make any orders under s 35. I explain those conclusions below.
The orders I make and the reasons for decision should not be publicly released in the usual way until seven days have elapsed from the date of these reasons.
I will begin with a discussion of the stay power before turning to the operation of s 35. In doing so, I will briefly explore the overlap between the two powers – although as I have explained, the overlap is of less importance in this case given ASIC has foreshadowed its intention not to take any of the additional steps that publicise the reviewable decision(s) if I order a stay or stays of those reviewable decisions. I will then deal with Ms A’s application for orders under both sections before dealing with Mr R.
The powers under s 41(2) of the AAT Act
Section 41(1) of the AAT Act makes clear that which is implied: in the absence of an order under s 41(2) that stays or otherwise affects the decision under review, that decision will come into effect on its terms notwithstanding the application for review.
The Tribunal’s stay power in s 41(2) is drafted awkwardly. Its operation has come to be well understood. Perhaps not in every respect: litigants sometimes miss the point of the power, which is not about relieving hardship per se. The power is one of a battery of powers that are available to ensure procedural fairness in the conduct of the review. As we shall see, hardship is certainly a relevant consideration when it comes to the exercise of the discretion. But the power is only available “for the purpose of securing the effectiveness of the hearing and determination of the application for review”.
If the power is engaged, the Tribunal may make orders if it “is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review…”. The orders might extend to the entirety of the reviewable decision, or some aspect of it, or to steps taken in the ordinary course to implement that decision. Those steps might be mandated by statute (such as making entries in a public register) or they might be merely administrative, such as issuing a media release: see, generally, Australian Securities and Investments Commission v Administrative Appeals Tribunal [2009] FCAFC 185 (ASIC v AAT) per Downes and Jagot JJ at [50]. Section 41(6) confirms the Tribunal is free to adapt the stay orders by attaching conditions (e.g., requiring the applicant to give an undertaking) to better achieve an outcome that is consistent with the objectives in s 41(2).
There are limits to the Tribunal’s willingness to entertain conditions. Conditions which contemplate active supervision by a regulator with limited resources are usually unattractive. The Tribunal should also be cautious about unduly elaborate or extensive conditions which are intended to give comfort in respect of alleged shortcomings. As Downes J and Hack DP observed (albeit in a different context) in Rent-to-Own Australia Pty Ltd and ASIC [2011] AATA 689 at [47]:
The central consideration remains, however, good regulation and good administration, not an overanxious desire to permit regulated activity wherever possible.
The same ‘good government’ considerations inevitably apply when considering the appropriateness of conditions in the context of a stay.
While each case must be taken and analysed on its individual merits having regard to the language of the statute, decisions like Scott and Australian Securities and Investments Commission [2009] AATA 798 suggest considerations that are typically relevant. In that case, Downes J said (at [4]) those matters include:
(a)the applicant’s prospects of success;
(b)the consequences for the applicant if the stay is refused;
(c)the public interest;
(d)the consequences for the respondent in carrying out its functions whether the stay is granted or not;
(e)whether the application for review would be rendered nugatory if a stay were not granted; and
(f)the length of time before a final hearing can be held, and any other relevant matter.
The fifth of these considerations – whether the application for review would be rendered nugatory – arguably engages with the purpose of the stay power which I discussed earlier. It follows that consideration is particularly important. In any event, the oft-cited list of considerations should not be regarded as a rigid checklist. The Tribunal is required to deal with each case on its merits, and there is no substitute for focusing on the words of s 41(2) which require the Tribunal to be satisfied the stay is desirable after taking into account relevant interests. The objects and language of the statute under which the reviewable decision was made will also be relevant. But I accept the decision in Scott provides a useful framework for dealing with the question before me.
The powers under s 35 of the AAT Act
Section 35(1) says the Tribunal ordinarily conducts its hearings in public.[1] That means a member of the public or a journalist may read the daily listings, which are publicly available, and attend a hearing in person. Where the hearing is being conducted remotely using Microsoft Teams, a member of the public is entitled to ask for a link which permits them to access and quietly observe (but not record) the streamed hearing. The policy reason underlying that presumption of transparency is clear: first, public hearings promote public confidence in the Tribunal’s decision-making, and, incidentally, in the decision-making of the executive whose decisions are on display; and second, the Tribunal’s particular role in Australia’s system of administrative law is to model good decision-making behaviour. In doing so, the Tribunal establishes norms of conduct that improve decision-making in future cases. That makes for fairer, more efficient decision-making in the wider bureaucracy. It is obviously more difficult to play that role if the Tribunal’s proceedings occur behind closed doors.
[1] Special rules apply in some proceedings in some divisions – for example, proceedings in the Security Division are conducted in private and parts of those proceedings are conducted in the absence of the applicant. In taxation reviews, the applicant is also entitled to a private hearing pursuant to s 14ZZE of the Taxation Administration Act 1953 (Cth).
While public hearings are the default setting, s 35 authorises the Tribunal to make a range of so-called ‘confidentiality orders’ including orders:
(a)providing for a private hearing (i.e. a hearing which excludes persons from attending unless authorised): s 35(2);
(b)suppressing the identity of a party, a witness or any other person – which orders can extend to any information which may disclose that suppressed identity. Typically, an order might direct that a person be referred to using a pseudonym: s 35(3);
(c)restricting publication of information or evidence, or information about evidence: s 35(4).
Brennan J observed in Re Pochi and Minister for Immigration and Ethnic Affairs (1979) 36 FLR 482 that suppression powers should be used “sparingly”: at p 510. That conservative approach to the powers in s 35 is now encapsulated in s 35(5). When considering whether to exercise the discretion to make a confidentiality order of this kind, s 35(5) directs the Tribunal:
…to take as the basis of its consideration the principle that it is desirable:
(a) that hearings of proceedings before the Tribunal should be held in public; and
(b) that evidence given before the Tribunal and the contents of documents received in evidence by the Tribunal should be made available to the public and to all the parties; and
(c) that the contents of documents lodged with the Tribunal should be made available to all the parties.
The sub-section goes on to say that in considering the exercise of the power the Tribunal must:
…pay due regard to any reasons in favour of giving such a direction, including, for the purposes of subsection (3) or (4), the confidential nature (if applicable) of the information.
Applications for confidentiality orders are common in cases where an occupational regulator has made findings about an applicant that could cause reputational damage. Many applicants fear the bad publicity may lead to serious financial loss, business failure and personal ruin before the Tribunal is able to conclude its review. They worry they may not recover those losses even if they are substantially vindicated in the Tribunal’s decision.
The risk of reputational damage as a result of regulatory action was discussed by the Full Court in ASIC v AAT. In that case, Downes and Jagot JJ observed (at [76]):
When measured against the existence of the norm of a public hearing and the scheme established by the Corporations Act with respect to banning orders, it is apparent that the AAT would need some cogent reason by reference to the particular case to depart from the ordinary requirement of a public hearing. It is difficult to accept that harm (even serious harm) to the recipient’s reputation resulting from public awareness of the banning order will be a sufficiently cogent reason to justify the grant of a stay in most cases. This is because the risk of harm of this type is inherent in the nature of a banning order.
I discussed the wisdom of this approach in Daly and Australian Securities and Investments Commission [2020] AATA 1516 where I said (at [17]-[18]):
The Tribunal will look carefully at requests to suppress news of a reviewable decision even where the Tribunal is otherwise prepared to issue a stay under s 41(2). The reasons for that caution are obvious enough. The Tribunal’s review mechanism is intended to operate in a transparent way. But the Tribunal is also conscious that others who continue to deal with an applicant will be understandably angry if they later discover they were kept in the dark about a reviewable decision that might have influenced their choices as consumers of the applicant’s services.
While the Tribunal will consider the reputational damage and economic loss that an applicant might experience if the reviewable decision is published while the review proceeds, it might not give those concerns much weight. Requests for suppression orders – for that is what they are, in substance – will be scrutinised very carefully where the reviewable decision in question relates to a person’s right to participate in a regulated occupation. Participation in a regulated occupation brings many benefits, including (in many cases) economic advantages that accrue to licence holders. Those economic advantages flow from the establishment of barriers to entry that incidentally reduce competition between the favoured few. The licence necessarily carries with it a requirement that the licensee conform to the rules and participate in regulatory processes according to law. Most of those regulatory regimes … place a premium on transparency. It follows that a risk of bad publicity accompanying adverse regulatory action will often be regarded as an incident of a licensee’s participation in a regulated occupation.
Those policy considerations underlie the Tribunal’s conservative approach to the imposition of unduly elaborate conditions on a stay. The regulatory system in a case like this contemplates the public enjoying the protection afforded by an active regulator. As Downes J pointed out in Scott in the analogous context of proceedings to disqualify a director (at [10]):
I think it is important to note that the regulator which has supervisory control, at any event subject to appeal to the Administrative Appeals Tribunal, over the conduct of directors and managers, has made an adverse decision and all other things being equal, the public is entitled to the protection of such a decision.
His Honour’s observation underlines the reality of both the stay power and the power to make confidentiality orders in ss 35 and 41. Those powers are exceptional, and they should only be exercised in accordance with the criteria in those sections and having regard to the policy objectives of the regulatory regime.
I should make a final observation about the potential overlap between the powers in ss 35 and 41(2). The overlap may occur when an applicant wants to restrain the regulator from referring publicly to the reviewable decision. I have already explained there is no longer any doubt about the Tribunal’s power to make orders under s 41(2) restraining the regulator from recording the reviewable decision on the statutory register and issuing media releases – in the ordinary course of implementing a decision in accordance with the regulator’s statutory role. There must be some doubt about whether orders could be made under s 35 to restrain the performance of a statutory duty. Having said that, an order under s 41(2) would not inevitably extend to requiring the regulator to suppress information more generally. Orders under both ss 35 and 41 are likely to be required to achieve a comprehensive confidentiality regime if that were thought appropriate in a particular case.

As I have attempted to make clear, dealing with applications under both sections can be a challenge because each of them is subject to different criteria, and they are directed to different ends. Section 35 is arguably more prescriptive in its operation. Having said that, the concern evident in s 35 for public and transparent processes comports with the commitment to transparency and informed markets that informs the operations of s 41(2) in a case like this. It follows the power in s 41(2) to restrain ASIC from recording and publishing news of the reviewable decision in a case like this is likely to be used even more sparingly, to use the words of Brennan J in Pochi. When asked to make such orders under s 41(2), the Tribunal will typically have regard to similar considerations to those set out in ss 35(1) and (5).
Background to the application of Ms A
I must first set out the background to the application. That background is principally derived from the affidavit provided by the applicant dated 21 September 2021 and from the delegate’s reviewable decision dated 2 August 2021.
Ms A is a financial advisor. She comes from an indigenous background. (Her indigeneity is relevant for reasons that will become apparent below.) She holds tertiary credentials in financial planning. She is currently a director of a financial advisory and planning business with around 450 clients. The business employs a second adviser and a client services’ manager. The business is owned by the trustee of the applicant’s family trust. The entity which conducts the business was an authorised representative of another group that holds an Australian Financial Services Licence (AFSL) and the applicant says she is confident she will be appointed an authorised representative of that group if a stay is ordered. Some of the firm’s clients are indigenous persons, and the firm also has a number of female clients who are vulnerable because of domestic violence. The applicant has a particular interest in women’s issues which is also reflected in her active participation in voluntary community and political organisations. She has ambitions of being elected to public office at some point.
The applicant’s statement includes information about the finances of her business. The business is carrying significant debts which the applicant says must be refinanced if the business is to remain viable. She says the business will have to be sold if she does not get a stay. In that event she will be unable to pay for legal representation to continue these proceedings. She said she will discontinue the application for review, which will compound her financial loss and compromise her future in business, in community-based activities, and in politics.
I do not need to rehearse all the details of the delegate’s decision here. Suffice to say the applicant was formerly an authorised representative of companies related to the Linchpin Capital Group. She was found to have provided personal advice to several retail clients to invest in a managed investment fund called the Investport Income Opportunity Fund (IIOF) that was connected with the Linchpin Group. She and her then company also borrowed money from the IIOF. The IIOF subsequently failed. The ASIC investigation into the collapse initially focused on the principals behind the management of the fund but others – including the applicant – came to light. They were also subject to regulatory action.
ASIC’s delegate found the applicant had failed to comply with her obligations under the Corporations Act 2001 (Cth) (Corporations Act) when giving personal advice to retail clients, which was a contravention of s 920A(1)(e). The failures were said to include:
(a)failing to act in the best interests of clients in contravention of s 961B(1);
(b)failing to give appropriate advice in contravention of s 961G;
(c)failing to prioritise the clients’ interests in circumstances where there was a potential conflict between their interests and her own interests as a borrower from the IIOF in contravention of s 961J;
(d)providing non-compliant statements of advice in contravention of s 947D and failing to adequately disclose others matters as required.
The delegate found there was also reason to believe the applicant would not comply with those obligations in the future, which was an additional ground for cancellation under s 920A(1)(f). The delegate also found the applicant’s conduct over a long period demonstrated she was not adequately trained or was not competent within the meaning of s 920A(1)(da). The delegate decided a two-year ban was the appropriate response
Counsel for the applicant pointed out a relatively small number of clients were the recipients of the problematic personal advice between May 2016 and October 2017. The applicant was not given notice to attend the hearing before the delegate until November 2019, and the hearing was held in February 2020. The hearing was followed by further submissions and correspondence while investigations continued. The banning order was not communicated until 2 August 2021. In the meantime, the applicant continued in business without apparent incident or complaint.
Should the decision to ban Ms A be the subject of a stay?
That brings me to the matters I need to address under s 41(2).
The applicant has said she will be unable to continue with the proceedings if she does not receive a stay. She says the impact on her financial circumstances in the short term will be such that she cannot afford legal representation. On that analysis, a stay would tend to preserve the efficacy of the hearing and review. As I understood her argument, she was concerned that even if she did not discontinue the proceedings and instead persisted without legal representation, she is worried she will crystallise business losses when she is forced to sell the business. She says she will suffer reputational harm that cannot be properly rectified even in the event she is substantially or wholly vindicated. She says a stay order will ensure the review is effective in the event she succeeds.
Mr Goodwin pointed out on behalf of ASIC that the loss of legal representation is not an insuperable obstacle. Most applicants before the Tribunal are not legally represented, although most of those reviews are not as complex or time-consuming as this one is likely to be. I accept it is more convenient and less stressful for an applicant (and, frankly, more convenient for the Tribunal and the regulator) if an applicant has competent representation in a case like this. But legal representation is not essential to the efficacy of the review. I accept there is evidence suggesting the applicant will crystallise losses and experience significant financial hardship and reputational damage that may not be effectively remedied in the event of a favourable outcome. TI accept there is an argument that a stay order might preserve the efficacy of the hearing and review. I accept the relevant statutory purpose has been established.
The question is whether it is desirable to make such an order (and what are the appropriate terms of such an order) having regard to the interests of affected person. That process requires a balancing exercise. For convenience, I will address the relevant matters under the headings suggested by Downes J in Scott.
The applicant’s prospects of success
Other things being equal, the Tribunal is more likely to make a stay order where it is obvious the applicant’s case has good prospects of success, or substantial success, at the final hearing. An applicant with an unpromising case is much less likely to find favour in a stay application. As a practical matter, it is usually difficult to make a confident assessment of the applicant’s prospects because stay hearings are typically held at an early point in the review. It is not appropriate to conduct a mini-trial at that point. In most cases, the Tribunal will not have seen all the evidence the applicant plans to adduce in support of its substantive case. The best the applicant can manage in many cases is to foreshadow evidence and arguments that are likely to be available by the time of the final hearing. In cases like this, there will almost always be an argument over the appropriateness of the regulatory response even if there is unlikely to be much dispute over the underlying facts. An arguable case may not count for or against a stay.
ASIC doubts whether the applicant’s case has merit. ASIC points to a comprehensive decision by the delegate following a lengthy investigation. The applicant’s counsel, Ms Alpins, signalled there may not be a dispute about some of the key factual findings although I was told the Tribunal may take a quite different view of those facts when the entirety of the context was revealed. I was told the appropriateness of the regulatory response would be squarely in issue at the final hearing.
Ms Alpins emphasised I should not focus on whether the delegate’s decision was right and likely to be confirmed having regard to the material before the delegate. It was important to look forward (to the extent that is possible) to the material and arguments that would be presented at the final hearing since that material and those arguments might be quite different: see, generally, Shi v Migration Agents’ Registration Authority (2008) 235 CLR 286. I agree, although it is difficult to speculate what that additional information and arguments might be.
On balance, I am satisfied the applicant’s substantive case is arguable. Given the banning period is comparatively short, there must be a question about whether the Tribunal would take a different view (although I reminded the parties it was possible the Tribunal might take a more stringent view of the conduct and impose a longer banning period). It is difficult at this juncture to be more precise than that. I am satisfied this consideration does not weigh against a stay; indeed, particularly given the relatively short ban, it is possible this consideration weighs in favour of a stay.
The consequences for the applicant and others if the stay is granted or refused
The applicant has referred to the financial consequences – which could include the loss of her business, and the certainty of lost income – if the stay is not ordered. She has another financial adviser working in the business who can continue to service clients although I was told he was not equipped to assist all the clients, especially those who had special needs.
While counsel for ASIC asked questions about the adequacy of the evidence provided by the applicant as to her financial circumstances and the likely impact if she does not receive the benefit of a stay, I have no reason to doubt the applicant will experience significant losses, and I accept those losses may be hard to recoup even if she is successful on review. At a minimum, she will lose clients and the associated income if she cannot work in the industry in the short term.
The extent of the applicant’s loss will depend on whether the reviewable decision is stayed and on whether information about the reviewable decision is suppressed through a combination of orders under ss 41 and 35. There is no doubt the applicant will experience some loss even if she receives a stay under s 41 if she does not also have the benefit of confidentiality orders. If news of the reviewable decision becomes known, she may lose clients and have difficulty being appointed as an authorised representative even though the stay permits her to continue working in the business in the short term. Of course, the applicant’s concern about the commercial impact of the news points to the fact that consumers and other participants in the market are likely to believe the news is relevant and important to the decisions they make. As I will explain, suppressing that sort of market-sensitive information is a big step given “the public interest in the right of the market to know relevant information as soon as practicable…”: ASIC v AAT at [71] per Downes and Jagot JJ.
The applicant also referred to the deleterious impact on her home life (she cares for an elderly relative and has young children) and on her community-based activities if she does not have the benefit of a stay. I accept the financial hardship associated with the implementation of the reviewable decision might impair her capacity at home, and I accept the reputational damage might also impact on her external activities. To the extent that others are dependent on her, a stay will reduce the harm – albeit that the reduction in reputational harm will be greater if the applicant also benefits from confidentiality orders. On the other hand, members of community groups might expect the Tribunal would not suppress information that was relevant to their evaluation of any contribution of the applicant.
The applicant’s statement also referred to the potential impact of the reviewable decision on her political ambitions. She said in her statement that she would like to seek pre-selection for political office at some point in the future. She worries that news of the reviewable decision would be used against her by political rivals even if she were vindicated upon review. This is dangerous ground for any Tribunal. On the one hand, it is easy to imagine unscrupulous rivals in a political campaign focusing on adverse findings that were subsequently set aside on review (assuming that is what occurs here); but on the other, Tribunals should hesitate before trying to anticipate what voters might do in the future, much less what they are entitled to know and act upon when deciding on their vote.
If I do not order a stay, I accept there may be some disruption for the applicant’s firm’s female clients that are vulnerable. The clients who have come to the firm because they identify with the applicant’s indigenous identity or who have been the focus of outreach activities might also be inconvenienced. It was apparent from the applicant’s statement that these clients do not represent a large proportion of the firm’s total client base. ASIC, in its submissions, suggested the vulnerability of these clients and their dependence on the applicant might count against ordering the stay precisely because of that vulnerability and exposure. I accept both parties have a point but ultimately the number of clients in question appears to be small, so those concerns might balance each other out.
I am satisfied this consideration weighs in favour of an order staying the reviewable decision. An order that extends to preventing ASIC from publicising the reviewable decision might maximise the protection for the applicant but it also might prevent others who deal with the applicant from making their own judgment about matters of interest. Conditions might allow a more refined balancing of the protection.
The public interest
As Downes and Jagot JJ explained in ASIC v AAT (at [71]), the identification of the public interest is informed by the policy objectives of the legislative regime under which the reviewable decision is made: see also Australian Securities and Investments Commission v PTLZ [2008] FCAFC 164 at [42] per North and Downes JJ. The objectives of the regime in Chapter 7 of the Corporations Act are spelled out in section 760A, which provides (relevantly):
The main object of this Chapter is to promote:
(a) confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of those products and services; and
(aa) the provision of suitable financial products to consumers of financial products; and
(b) fairness, honesty and professionalism by those who providefinancial services; and
(c) fair, orderly and transparent markets for financial products;…
Section 760A makes clear that high standards are expected of participants in the financial services industry. The rules and requirements contained in the provisions in the balance of the chapter are directed to that end. ASIC is required to administer those rules consistent with the legislative policy which is articulated in s 760A and implicit in the substantive provisions which follow. The Tribunal must operate within the same parameters when it steps into ASIC’s shoes. Those objectives are also relevant to the Tribunal’s exercise of the discretions in ss 41 and 35 of the AAT Act.
A glance at s 760A and the substantive provisions of Chapter 7 makes clear the regulatory regime adopts a mixed strategy of enforcement and transparency. The regulator is tasked with enforcing express rules and standards to protect consumers of financial services. But the rules and the regulator are also concerned with promoting efficiency in markets. Economists tell us markets work better (i.e. more efficiently) when participants can trust that others will observe the law, act competently and conform to standards of commercial morality. Transparency surrounding the activities of the regulator is therefore important. Confidence is enhanced by a visibly capable, objective and rigorous regulator that administers well-crafted rules. The markets also play a protective function. Participants in markets that are informed of bad or unacceptable behaviour by others can react accordingly. It follows that concerns for efficiency and consumer protection are complementary.
The recent Royal Commission into the provision of financial services has highlighted the importance of effective laws and standards in the industry. The report of the Royal Commission prompted legislative reforms to increase the powers of the regulator and enhance the protections contained in Chapter 7. Those new provisions reinforce the policy evident in Chapter 7. Participants in the financial services industry are licensed and subject to regulation in the public interest. Participation in that industry is a privilege that confers financial benefits, but that privilege comes at the cost of complying with the regulatory regime which may include engaging with the regulator in the event of suspected transgressions. That regulatory process includes the Tribunal’s review. The existence of the review mechanism provides a level of assurance to the regulated (and to markets more generally) that the regulatory regime is administered competently and fairly. The entirety of that decision-making process is intended to be as transparent as possible. Transgressors may be dealt with to provide an example pour les autres.
Participation in an occupation that is regulated in the public interest – particularly in a sensitive industry like this – means the participant should not inevitably expect the benefit of the doubt on a stay application in the wake of a reviewable decision that suggests consumers might be at risk. That point has been made by Downes J in Scott, where his Honour said that, other things being equal, the public was entitled to the benefit of a regulator’s decision in the short term.
Yet there is good reason to question whether there is a significant risk of imminent harm to consumers if the applicant in this case were permitted to remain in practice while the review proceeds. I acknowledge the delegate has made worrying findings that the applicant lacks competence, and that she has not been properly trained. I also acknowledge the delegate’s conclusion that there is reason to believe the applicant is likely to contravene financial services laws in the future. Nevertheless the applicant was able to trade for a significant period after the problematic conduct which lies at the heart of this case. While ASIC says that delay was attributable to the complexity of the larger investigation and ASIC’s attempts to facilitate the applicant participating fully in the decision-making process, there is no suggestion of bad or incompetent behaviour apart from that which has been identified. The applicant also has an incentive to be cautious in her behaviour given the scrutiny she will be under while the review is on foot. I accept that scrutiny is likely to be more effective if the fact of the reviewable decision was more widely known in the market.

Ms Alpins referred to the decision in Opus Capital Ltd and Australian Securities and Investments Commission (2010) 117 ALD 608 in this regard. Deputy President Hack took account of the delay in making the reviewable decision when evaluating the risk of imminent harm. It should be noted ASIC’s reviewable decision in that case tuned on technical interpretations of accounting rules rather than on allegations of misconduct, and ASIC says the delay in this case is not remarkable. I accept the underlying point that the conduct of the applicant since her engagement with ASIC might suggest a more sanguine assessment of the risk if she were to remain in business in the short term.
ASIC noted that banning orders are not simply designed to protect consumers from the applicant’s bad behaviour. They also have a general deterrent effect, so it is not necessarily to the point to argue the applicant has learned her lesson or will not have the opportunity to repeat the conduct. Ordering a stay while the review proceeds does not necessarily undermine specific or general deterrence. The deterrent effect comes from the operation of the regulatory process, which includes the Tribunal’s review. An order under s 41(2) that stays the operation or implementation of the reviewable decision is designed to promote the efficacy of the review process. The existence of that power and the commitment to procedural fairness which underlies it will enhance the deterrent effect of any adverse decision that might ultimately issue from the process – particularly in circumstances where the reviewable decision and the fact of any stay are matters of public record.
I am satisfied the public interest counts against ordering a stay, but not decisively so – particularly in circumstances where it is possible to impose conditions, and on the assumption that news of the reviewable decision is not suppressed.
The consequences for the respondent in carrying out its functions whether the stay is granted or not
I have already discussed the object of the regime in Chapter 7 of the Corporations Act and ASIC’s role. I do not accept that ordering a stay of the reviewable decision reflects on its credibility as a regulator If anything, the manifest transparency and fairness of the decision-making process which includes the Tribunal’s review should enhance confidence.
There is one caveat to that observation. ASIC may be left in a difficult position if it is unable to speak about the decision it has made. Mr Goodwin said ASIC would not proceed to record the reviewable decision on the statutory register or issue a media release if the reviewable decision were subject to a stay order. But what if ASIC were asked about the applicant or her case by a consumer or a journalist? The applicant’s customers would almost certainly regard information about regulatory action as being relevant to the decision they make about whether to retain the applicant’s services. They would expect ASIC to disclose concerns if it had them. ASIC’s credibility is on the line to the extent it is required to remain quiet about problematical behaviour that it has formally identified. That concern weighs heavily against using s 41 to gag ASIC, and points to the importance of appropriate conditions that allow the applicant’s customers to be informed about the regulatory action and the review.
Whether the application for review would be rendered nugatory if a stay were not granted
I have already addressed the substance of this concern. Suffice to say at this juncture I accept the effectiveness of the hearing might be reduced (in the sense the applicant might sustain damage that will not be wholly addressed if she is successful on review). The risk of reputational harm might be more effectively contained if I were to make suppression orders in the interim. I accept the applicant will face a challenge if she were trying to participate in the proceedings without legal representation, but I do not give that consideration much weight because we can adapt the processes somewhat to accommodate a self-represented litigant.
This consideration weighs in favour of a stay on conditions, although not heavily.
The length of time before a final hearing can be held, and any other relevant matters
The parties agreed the case was still at an early stage. Further intensive work would be required on the applicant’s behalf before it was ready for hearing. Ms Alpins said there was no reason to assume there would be unusual delay, but a hearing was still several months away. It follows the applicant is likely to serve (if that is the right word in the context where a banning period is not intended to punish) a substantial portion of the banning period that was imposed before obtaining a decision on review.
I am not aware of any other matters that are relevant to the exercise of my discretion.
Conclusion with respect to s 41(2)
I am satisfied after balancing all the factors I have mentioned that it would be desirable to stay the operation of the decision under review so that the applicant is permitted to continue working as a financial adviser while the review proceeds. I am not satisfied the stay should extend to restraining ASIC from recording or publicising the reviewable decision while the review proceeds, although that may have limited practical implications given ASIC’s administrative practice of refraining from making entries on the register or issuing a media release when a stay has been ordered. I am satisfied the stay should be subject to conditions to assuage lingering concerns about the risk to the public interest. The precise terms of the conditions will be impacted by my reasoning and conclusions in relation to the application for orders under s 35. I will return to the questions of conditions below.
Should orders be made under s 35 in relation to Ms A?
I have already explained the discretionary powers under ss 41 and 35 need to be considered separately even though similar policy concerns may arise under both provisions. I have also explained s 35(5) makes clear the Tribunal “is to take as the basis of its consideration the principle that it is desirable” that hearing processes will be open – although the Tribunal is also required “to pay due regard to any reasons in favour of giving such a direction, including, for the purposes of subsection (3) or (4), the confidential nature (if applicable) of the information.”
It should be said at once that the applicant does not appear to argue there is anything in or about the proceedings that bears an inherently confidential nature. To the contrary; regulatory action has an inherently public dimension. Of course it is possible that inherently confidential material might come to light during the review; there might be private details of third persons that are mentioned in evidence, for example, or documents recording commercially sensitive negotiations. However, we can deal with those matters and make appropriate orders as required rather than making blanket orders from the outset.
The applicant’s submissions appear to rely on the likelihood of hardship if the proceedings and the evidence were publicly known before the Tribunal completes its review. The applicant says pre-hearing publicity would cause damage that might not be addressed if she were successful at the conclusion of the review. She says that damage might extend beyond her to affect the interests of others, including clients, employees, vulnerable members of the community, community groups, and family members. She argues there is a balancing act to be performed in which the presumption of public and transparent hearing processes is offset (at least in this case) by the prejudice that will flow.
The applicant’s fear of prejudice is not fanciful. The applicant was caught up in the investigation of a high-profile failure which has been extensively reported. While ASIC has indicated it will not actively publicise the reviewable decision or the proceedings in circumstances where I make stay orders under s 41(2), an inquisitive member of the public or a journalist might scan the press list and notice the applicant’s name and attend a hearing if orders are not made under s 35. They might report on what they learn, which would potentially include the detail of adverse findings, and they might do so in a sensational or salacious way. Witnesses or others with some connection with the proceedings might discuss their involvement. Anybody who becomes aware of the proceedings could also make enquiries of ASIC. Media enquiries are often directed to the Tribunal and may come in the form of a request to access the contents of the Tribunal’s file before any hearing has occurred. While documents that are tendered in evidence at a hearing are ordinarily available in accordance with the principles in s 35, untendered documents lying on the Tribunal’s file are not otherwise accessible to the public in the absence of orders permitting third party access. Even the member hearing the matter does not have unrestricted access to the Tribunal’s file; there are documents on the file relating to alternative dispute resolution proceedings (for example) that are quarantined from the members who sit on the hearing to facilitate effective pre-hearing negotiations. The applicant wants orders under s 35 that will reduce the risk of adverse publicity before the review is complete.
The applicant is right to suggest the exercise of the discretion requires a balancing exercise in which the public interest in open justice (the starting point of my consideration) is weighed against factors favouring non-publication orders of various kinds. In doing so, I keep in mind that the predisposition towards open hearings in s 35 is reinforced by the regulatory regime evident in Chapter 7 of the Corporations Act. As I have already explained, transparency is essential to the regulatory regime’s objective of promoting efficiency and consumer protection in various ways.
On balance, I am not satisfied the considerations enumerated by the applicant in her statement displace the presumption of transparency and a public hearing. In those circumstances, I am not prepared to make the orders sought under s 35.
The form of orders in relation to Ms A
The public interest in transparency in this case is such that I will insist the applicant undertake to disclose the fact of the reviewable decision to those clients of her firm with whom she deals as a condition attaching to the stay order under s 41(2). The applicant would be entitled to state she contests the delegate’s findings and advise she is seeking review in the Tribunal. She would also outline the terms and effect of the stay order. That disclosure should come in a letter agreed with ASIC before the stay takes effect. That disclosure will have the effect of providing information to clients who can make their own choice about whether to continue engaging the services of the applicant’s firm. The disclosure need not be more wide-ranging than that given two other conditions the applicant proposed in her affidavit (at [31]), namely that:
(a)She will not provide any financial advice to new clients pending the outcome of the review; and
(b)Each instance of personal advice she gives to existing clients will be pre-vetted by a person with requisite qualifications and experience as nominated by the responsible licensee.
The three conditions are appropriate means of shaping an order that satisfies the public interest concerns in particular while minimising, as far as possible, the adverse fallout in the short term that may be hard to rectify if the applicant is successful on review. I accept any letter to clients may make its way into the public domain and be the subject of media commentary. That cannot be helped. The risk of that occurring is ultimately the price of doing business in a regulated occupation.
The application in relation to Mr R
Mr R has also applied for a stay and confidentiality orders. I will not restate the principles and the policy considerations in the discussion that follows. They are the same as those which apply to Ms A.
The reviewable decision in relation to Mr R arises out of the same collapse that prompted the investigation and reviewable decision in relation to Ms A. The history of the decision-making process is similiar although possibly more protracted, however. Mr R was called to a compulsory examination in November 2018. In December 2019, he received a notice of a hearing before the delegate, but that hearing did not take place until November 2020. The delegate’s banning order was not made until 2 August 2021. In Mr R’s case, the banning order is for a period of three years.
The reviewable decision discussed evidence about the applicant’s dealing with a handful of clients to whom he had provided personal advice about investing in the IIOF fund – a fund from which he had borrowed money. The delegate found:
(a)ASIC had reason to believe the applicant was not competent or adequately trained;
(b)The applicant had failed to comply with financial services laws; and
(c)ASIC had reason to believe the applicant is likely to contravene a financial services law.
The delegate’s findings are serious. While they parallel the findings made against Ms A, the banning order is for a longer period than that which applied to Ms A.
Mr R explained in his statement that he is a single man with few assets apart from his superannuation. He has extensive experience in the financial services industry and was until recently an authorised representative of another organisation with an AFSL. He says if he is unable to pursue his calling in the short term, he will lose his clients and, in all likelihood, his business. He says he will experience significant financial loss in that event. He also says he will experience real difficulty re-establishing his business if he is successful at the final hearing. He doubts he could afford legal representation if he cannot work as a financial adviser in the short term. I note Mr R derives a comparatively modest return from the business; it is not clear he would be able to afford legal representation even if the business remains operational.
Should orders be made under s 35 to protect the identity of Mr R?
I have already discussed the operation of s 35 and the policy considerations which apply. I concluded there was no basis for making orders in relation to Ms A notwithstanding her concern about the damaging impact of a transparent process on her interests and potentially those of other third parties. Indeed, I made clear that news of the administrative action should be brought to the attention of any clients she continued to service if a stay was otherwise ordered under s 41(2). The same reasoning applies to Mr R. There is nothing inherently confidential about the fact of regulatory action and there is no reason for his identity and the hearing to be subjected to non-publication orders under s 35. I accept he may occasion loss that may not be recovered as a consequence of reputational damage, but that is a incident of the regulatory process which is intended to operate in a transparent way.
Should orders be made under s 41(2)?
Mr R’s prospects for success at the final hearing are, at best, unclear. Written submissions lodged on his behalf focused on the disproportionate nature of the banning order. Even allowing for the fact the process is at an early stage, it is difficult to know what to make of that assertion. I accept the conduct occurred some time ago. It is certainly possible the Tribunal might reduce the duration or scope of the banning order even if it makes essentially the same conduct findings as the delegate. I am not satisfied this consideration counts in favour of the exercise of the discretion, although I would not go so far as to say it is an obviously weak case.
Mr R will certainly experience financial hardship if he cannot remain in business as a financial adviser in the short term. He may lose his business, and I accept it may be hard to recoup that loss if he were vindicated on review. It is unclear who else might be substantially affected if he does not get an order under s 41(2) (apart from his clients who might experience inconvenience). I also accept he may not be able to afford a lawyer to represent him if he does not retain a stay, although it is unclear whether he will be able to afford that assistance even if he were to remain in business in the short term.
The respondent’s role will not be prejudiced by an order that permits the applicant to remain in business in the short term.
There is a serious question over the public interest. On the one hand, the delegate made serious findings against the applicant. Those findings suggest there is a risk to the investing public if the applicant remains in business. On other hand, the risk is unlikely to be great in circumstances where the principal misdeeds identified by the delegate occurred some time ago, and the applicant has not been in trouble since. It may be that the risk can be successfully managed through the imposition of conditions which include a requirement of supervision and disclosure.
The hearing would not be rendered entirely nugatory and the review process would not be wholly frustrated if I declined to make a stay order, but the review might be more effective (in the sense that the applicant will experience less damage in the short term that cannot be recovered in the event he is successful on review) if a stay were ordered.
It is unclear whether the reviews of Mr R and Ms A will proceed together or separately. At this stage, they have common representation. Suffice to say there is no reason to believe there will be undue delay in progressing the review of Mr R’s case.
On balance, I am satisfied it is desirable to order that the reviewable decision in relation to Mr R be stayed on conditions that:
(a)the applicant be supervised by the AFSL holder that engages him as an authorised representative;
(b)his business does not take on any new clients while the review proceeds;
(c)before the stay takes effect, the applicant informs his existing clients in writing in a form agreed with ASIC of the regulatory action so they may make an informed decision whether to continue with his services.
I reach that view after balancing all the considerations I have discussed, but particularly in light of the fact the problematic advice that was central to the reviewable decision was provided some significant time ago.

I certify that the preceding 85 (eighty-five) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe.

..........................[SGD]................................
Associate
Dated: 17 February 2022

Dates of hearing: 3 February 2022

Counsel for the Applicant: Ms F Alpins

Solicitors for the Applicant: Mills Oakley Lawyers

Counsel for the Respondent: Mr T Goodwin

Solicitors for the Respondent: Mr Matthew Povey

Dates of hearing:	3 February 2022
Counsel for the Applicant:	Ms F Alpins
Solicitors for the Applicant:	Mills Oakley Lawyers
Counsel for the Respondent:	Mr T Goodwin
Solicitors for the Respondent:	Mr Matthew Povey