Burnell and Australian Securities and Investments Commission - [2020] AATA 4186

Burnell and Australian Securities and Investments Commission [2020] AATA 4186 (19 October 2020)
Division:TAXATION AND COMMERCIAL DIVISION
File Number: 2017/7574
Re:Tracey Burnell
APPLICANT

AndAustralian Securities and Investments Commission
RESPONDENT

DECISION
Tribunal:F D O'Loughlin QC, Deputy President
Professor A O'Connell, Senior Member
Date:19 October 2020
Place:Melbourne

The Tribunal affirms the decision under review.
...........[sgd].............................................................
F D O'Loughlin QC, Deputy President and Professor A O’Connell, Senior Member
Catchwords
CORPORATIONS ACT – financial services – licensing – authorised representative – banning order – arranging insurance contracts without an Australian Financial Services Licence and while not an authorised representative of a Australian Financial Services Licence holder involvement in non-compliance with a financial services law – reason to believe that Applicant is likely to contravene or likely to become involved in a contravention of a financial services law – decision affirmed
Legislation
Administrative Appeals Tribunal Act 1975 (Cth).
Australian Securities and Investments Commission Act 2001 (Cth).
Corporations Act 2001 (Cth).
Financial Sector Reform (Hayne Royal Commission Response – Stronger Regulators (2019 Measures)) Act 2020 (Cth).
Legal Profession Practice Act 2004 (Vic).
Cases
Australian Securities Commission v Kippe (1996) 67 FCR 499
Australian Securities and Investments Commission v Administrative Appeals Tribunal [2009] FCAFC 185.
Australian Securities and Investments Commission v Wealth & Risk Management Pty Ltd (No 2) [2018] FCA 59
REASONS FOR DECISION
F D O'Loughlin QC, Deputy President
Professor A O'Connell, Senior Member
19 October 2020

The Applicant seeks a review of banning orders made under ss 920A and 920B of the Corporations Act,[1] prohibiting her from providing any financial services permanently.
[1]Corporations Act 2001 (Cth).
The banning orders were made following a review of the Applicant’s role and activities as sole director and controlling mind of the Applicant’s Companies[2] from 2014 to 2017. In that period the Applicant’s Companies’ clients entered into insurance contracts. The relevant insurance contracts were arranged either by the Applicant, or by the Applicant’s Companies as a consequence of the Applicant’s activities as sole director and controlling mind of those companies.
[2]Landlord Protection and Collection Pty Ltd (LPC) and Landlord Protection Group Pty Ltd (LPG).
ASIC[3] alleges that neither the Applicant nor the Applicant’s Companies were authorised to engage in these activities; that being unauthorised whilst engaged in those activities constitutes a contravention of ss 911A and 911B of the Corporations Act; and that taking into account the Applicant’s past financial services laws shortcomings and her other conduct from 2014 to 2017, she should be banned from providing all financial services permanently.
[3]The Respondent: the Australian Securities and Investments Commission.
The Applicant argues that the Applicant’s Companies were authorised to arrange insurance contracts in the way that they did and so the foundation for the banning orders does not arise.
LEGISLATION
Chapter 7 of the Corporations Act, Financial Services and Markets, contains the regime for licensing and authorisation of those who provide financial services and financial products. Chapter 7 also contains the provisions that allow banning orders to be made.
In asserting that the Tribunal should affirm the decision under review, ASIC relies on ss 920A(1)(d), (da), (e), (f), (g) and (h) the Corporations Act,[4] which are currently in the following terms:
[4]When the banning order was made ss 920A(1)(d) and (da) of the Corporations Act were in the following terms:
(d)ASIC has reason to believe that the person is not of good fame or character;
(da) ASIC has reason to believe that the person is not adequately trained, or is not competent, to provide a financial service or financial services.
Section 920A(1)(d) and s 920A(1)(da) were amended in February 2020 by the Financial Sector Reform (Hayne Royal Commission Response – Stronger Regulators (2019 Measures)) Act 2020 (Cth).
Section 920A – conditions enlivening banning order powers
(1)ASIC may, in writing, make one or more orders (banning orders) against a person if:
….
(d)ASIC has reason to believe that the person is not a fit and proper person to:
…
(iii)control an entity that carries on a financial services business; or
(da)ASIC has reason to believe that the person is not adequately trained, or is not competent, to:
…
(iii)control an entity that carries on a financial services business; or
(e)the person has not complied with a financial services law; or
(f)ASIC has reason to believe that the person is likely to contravene a financial services law; or
(g)the person has been involved in the contravention of a financial services law by another person; or
(h)ASIC has reason to believe that the person is likely to become involved in the contravention of a financial services law by another person…
(Emphasis added)
The ss 920A(1)(e), (f), (g), and (h) foundations for a banning order all have a threshhold condition: past or prospective non-compliance with financial services laws. ASIC points to breaches of s 911A which requires that a person carrying on a financial services business must hold a financial services licence or other authorisation; and s 911B which requires a person providing financial services on behalf of a licence holder to be properly authorised, both of which draw in consideration of ss 916A and 916F relating to how a person becomes authorised. ASIC also relies on breach of s 1041H which prohibits misleading or deceptive conduct in relation to a financial product or service.
The presently relevant parts of ss 911A, 911B, 916A, 916F and 1041H are in the following terms:
Section 911A - Need for an Australian financial services licence
(1)Subject to this section, a person who carries on a financial services business in this jurisdiction must hold an Australian financial services licence covering the provision of the financial services.
Note 1: Also, a person must not provide a financial service contrary to a banning order or disqualification order under Division 8.
Note 2: Failure to comply with this subsection is an offence (see subsection 1311(1)).
(2)However, a person is exempt from the requirement to hold an Australian financial services licence for a financial service they provide in any of the following circumstances:
(a)the person provides the service as representative of a second person who carries on a financial services business and who:
(i)holds an Australian financial services licence that covers the provision of the service; or
(ii)is exempt under this subsection from the requirement to hold an Australian financial services licence that covers the provision of the service;
Note: However, representatives must still comply with section 911B even if they are exempted from this section by this paragraph.
Section 911B – Providing financial services on behalf of a person who carries on a financial services business
(1)A person (the provider ) must only provide a financial service in this jurisdiction on behalf of another person (the principal ) who carries on a financial services business if one or more of the following paragraphs apply:
…
(b)these conditions are satisfied:
(i)the principal holds an Australian financial services licence covering the provision of the service; and
(ii)the provider is an authorised representative of the principal; and
(iii)the authorisation covers the provision of the service by the provider…
Section 916A – How representatives are authorised
(1)A financial services licensee may give a person (the authorised representative ) a written notice authorising the person, for the purposes of this Chapter, to provide a specified financial service or financial services on behalf of the licensee.
Section 916F – Obligation to notify ASIC etc. about authorised representatives
(1)A person must lodge with ASIC a written notice (in accordance with subsection (2)), within 15 business days, if the person authorises a representative to provide a financial service as mentioned in section 916A or 916B.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).
(2)The notice must include the following details:
(a)the name and business address of the representative;
(b)details of the authorisation, including the date on which it was made and what the representative is authorised to do on behalf of the relevant licensee;
(c)details of each other financial services licensee on behalf of whom the representative is an authorised representative.
Section 1041H - Misleading or deceptive conduct
(1)A person must not, in this jurisdiction, engage in conduct, in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive.
The s 920A(1)(f) foundation for a banning order, namely being involved in a contravention of financial services law by another person, draws in the s 79 definition of what constitutes being ‘involved in’ a contravention of a provision of legislation which is in the following terms:
‘involved in’: a person is involved in a contravention of a provision of legislation if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
The s 920A(1)(g) and (h) foundations for a banning order, namely the decision-maker having reason to believe that a person is likely to contravene, or is likely to become involved in a contravention, require an assessment of likely future conduct based on the evidence of past conduct.
Section 920B – scope and term of banning orders
A s 920A banning order can be absolute, or directed to particular activities, as provided for in s 920B, which is in the following terms:
(1)A banning order made against a person may specify that the person is prohibited from doing one or more of the following:
(a)providing any financial services;
(b)providing specified financial services in specified circumstances or capacities;
(c)controlling, whether alone or in concert with one or more other entities, an entity that carries on a financial services business;
(d)performing any function involved in the carrying on of a financial services business (including as an officer, manager, employee, contractor or in some other capacity);
(e)performing specified functions involved in the carrying on of a financial services business.
Other than where s 920A(1)(k) applies,[5] s 920B(2) of the Corporations Act allows a banning order to specify that a particular prohibition specified in the order applies against the person either permanently or for a specified period.
[5]Section 920A(1)(k) of the Corporations Act deals with a banning order against a person who has been an officer of two or more corporations that have been wound up as unable to pay their debts.
Objectives of the legislative scheme and banning orders
The licensing regime is part of the scheme regulating the provision of financial products and services. The objectives of the Chapter are set in s 760A in the following terms:
Section 760A:
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
(b)fairness, honesty and professionalism by those who provide financial services; and
(c)fair, orderly and transparent markets for financial products; and
(d)the reduction of systemic risk and the provision of fair and effective services by clearing and settlement facilities.
The licensing regime in particular is directed at the objectives in paras (a) and (b) which include consumer protection objectives as a primary focus. The power to ban a person from providing financial services is intended to fulfill this function:
That the section is not intended to be punitive is made apparent by having regard to the range of specified grounds which must be established before such an order is made. These include standard non-blameworthy grounds, for example, becoming ‘an insolvent under administration’ …..
The immediate and direct legal effect intended by a banning order is not to impose a penalty or punishment on the person concerned, but to be preventive in that it removes a perceived threat to the public interest and to public confidence in the securities and futures industry by removing that person from participation therein.[6]
[6]Australian Securities Commission v Kippe (1996) 67 FCR 499 (von Doussa, Cooper & Tamberlin JJ).
ISSUES
At the broadest level, the issues for the Tribunal to determine in the present application are:
(a)whether a banning order under s 920A should be made; and
(b)if so, the scope and duration of such a banning order.
Section 920A sets out various grounds for making a banning order. To determine whether a banning order should be made, ASIC has asked the Tribunal to consider:
(a)whether the Applicant has not complied with a financial services law (defined to include, but not limited to, Chapter 7) or been involved in a contravention of a financial services law by another person: s 920A(1)(e) and (g);
(b)whether there is reason to believe that the Applicant is likely to contravene a financial services law or is likely to become involved in the contravention of a financial services law by another person: s 920A(1)(f) and (h);
(c)whether there is reason to believe that the person is not a fit and proper person to control an entity that carries on a financial services business: s 920A(1)(d)(iii);
(d)whether there is reason to believe that the person is not adequately trained, or is not competent, to control an entity that carries on a financial services business: s 920A(1)(da)(iii).
FACTS
The Applicant has been involved in businesses providing property management and landlord services for more than 20 years. Included in the services provided by those businesses have been rent/debt collection services and organising landlord protection insurance.
On 29 April 2011, the First Banning Order[7] was made against the Applicant. That ban was imposed after the Applicant arranged contracts of insurance through P&C[8] which she controlled, without being licensed or authorised.
[7]The Order made pursuant to s 920A of the Corporations Act banning the Applicant from providing financial services for 3 years from 29 April 2011 to 29 April 2014.
[8]Protection and Collection Pty Ltd.
P&C commenced being wound up on 24 May 2011[9] and a new company, LPC[10] was incorporated on the same day.
[9] The company was deregistered on 26 August 2012.
[10]Landlord Protection and Collection Pty Ltd.
On 6 August 2014, the Applicant was convicted of an offence under the Legal Profession Practice Act 2004 (Vic) of representing that she was entitled to engage in legal practice when she was not an Australian legal practitioner. The conviction related to several representations made by the Applicant in the course of LPC’s business in 2012.
Between 2014 and 2017, the Applicant was the sole director and controlling mind of the Applicant’s Companies, (LPC until April 2017 and LPG[11] from May 2017). Those companies provided services to landlords, including rent arrears collection and arranging landlord and building insurance. The majority of the companies’ clients came from members of The Property Club, a property investment club. This provided a steady stream of income for LPC.
[11]Landlord Protection Group Pty Ltd.
The Applicant’s Companies had arrangements with five insurance brokers, four of whom were AFSL[12] holders and the fifth was an authorised representative of an AFSL holder, relating to the provision of landlord and other insurance to clients:
(a)from 2014 to April 2017, Australian Reliance[13] and subsequently PSC Australian Reliance;[14]
(b)from July 2016 to October 2016, FD Beck;[15]
(c)from 9 June 2017 to 22 June 2017, Whitbread;[16] and
(d)from August 2017, PIP.[17]
[12]Australian Financial Services Licence.
[13]Australian Reliance (NSW) Pty Ltd an AFSL holder. Australian Reliance was acquired by PSC Insurance Brokers (Aust) Pty Ltd in 2016.
[14]Australian Reliance and PSC Insurance Brokers (Aust) Pty Ltd an Australian Financial Services Licence (AFSL) holder.
[15]FD Beck and Sons Pty Ltd, an AFSL holder.
[16]Whitbread Associates Pty Ltd, an AFSL holder.
[17]PI Plus (Aust) Pty Ltd trading as Property Insurance Plus (Australia) – an authorised representative of Fitzpatrick & Company Insurance Brokers Pty Ltd – an AFSL holder.
In 2014, after the First Banning Order prohibition period had ended, LPC commenced providing services to property owners that included arranging landlord insurance and building insurance.
ASIC commenced its investigations concerning the Applicant in early 2017. The Applicant attended a s 19 examination[18] with ASIC on 15 May 2017 and attended a hearing with a representative of ASIC on 26 October 2017 in relation to ASIC’s concerns, before the delegate made the banning order, the subject of these proceedings.
[18]Section 19 of the Australian Securities and Investments Commission Act 2001 (Cth) which authorises ASIC, to examine a person under oath where ASIC suspects or believes on reasonable grounds, that a person can give information relevant to a matter that it is investigating, or is to investigate, under the Act.
LPC
A number of features of LPC’s business and its dealings with clients and brokers, some common throughout 2014 to April 2017 (when LPC was wound up) and some arising from time to time, are revealed by the evidence:
(a)the website of LPC stated that the available services included Landlord insurance at affordable and competitive rates for Australian landlords. Provided by Landlord Protection & Collection. The website did not refer to any broker or insurance company;
(b)prospective clients of LPC interested in purchasing insurance completed a form on the website, or enquired by telephone;
(c)completed forms were sent to the brokers, the broker then obtained a quote for the insurance from an insurance provider and sent the quote to LPC. LPC produced its own quote, on the LPC letterhead, and sent its own quote to the client. The LPC quote did not refer to any broker or insurance company;
(d)if the client wished to proceed, LPC obtained an invoice from the broker who issued an invoice for the insurance policy premium. In turn, LPC produced its own invoice, on the LPC letterhead, and sent its own invoice to the client. The invoice provided that the amount owing was to be paid to LPC’s bank account. The LPC invoice did not refer to any broker or insurance company;
(e)the amount payable to LPC sometimes reflected the amount invoiced by the broker. Sometimes the amount payable to LPC was higher than the amount invoiced by the broker. In one case, the broker’s invoice was for an amount of $931.32 but the LPC invoice, containing the same insurance policy details, was for $1,882.95. In her s 19 examination by ASIC, the Applicant admitted to increasing the amounts payable in respect of insurance premiums for various reasons including: to pay a fee payable to LPC; or where the quote from the broker was lower than the price LPC had advertised or the price paid for the previous year’s insurance; or because the client wished to pay quarterly. In one of the years there was a change in underwriters of insurance policies from Allianz[19] or CGU[20] to CHUBB,[21] and premiums charged by the new underwriter (CHUBB) were lower. At least for some clients, and for one client in particular who was in relative need, the reduced premiums were not passed on, with the effect that without client knowledge, clients were being charged excessively for the insurance products arranged by LPC;
(f)the invoices prepared by LPC and sent to clients did not disclose the amount of any fee or commission payable to LPC. The Applicant gave evidence that in some cases this was $50, in others it was $66 and later it was $70 for arranging landlord insurance. LPC also retained the additional amounts received from clients representing the difference between the broker’s invoice and the LPC invoice;
(g)in some cases LPC’s commission was paid by the broker, but in other cases it was added to the amount owing and so paid by the client;
(h)amounts received by LPC from clients were paid into LPC’s bank account;
(i)ASIC alleged that LPC had failed to pass on all the amounts received from clients for insurance policies to the brokers, but the Applicant disputed this.
[19]     Allianz Australia Insurance Ltd.
[20]     CGU Insurance Ltd.
[21]     CHUBB Insurance Australia Ltd.

The extent to which brokers were aware of LPC’s activities, particularly the finer details of them, is not clear.
LPC’s arrangement with Australian Reliance/PSC Australian Reliance
In late 2014, LPC began an arrangement with Australian Reliance in connection with provision of insurance contracts for LPC clients. Details concerning the nature of the arrangement were unclear. However, from at least February 2016, Australian Reliance, and later PSC Australian Reliance, were paying commissions to LPC in respect of insurance policies.
There was no written authorised representative agreement of any kind between LPC and Australian Reliance or PSC Australian Reliance.
In November 2016, LPC entered into a written agreement with PSC Australian Reliance, which was titled Referrer Agreement. The agreement was signed by a PSC Australian Reliance employee, and the Applicant as the authorised officer of LPC. The terms of that agreement included that LPC:
(a)was to refer prospective clients who sought insurance to PSC Australian Reliance, in exchange for a commission of $70 for each new or renewed insurance contract;
(b)was authorised only to give prospective customers information about the financial services provided by PSC Australian Reliance and how to contact PSC Australian Reliance;
(c)was not to give any advice about insurance matters or to publish information about financial services or products not approved by PSC Australian Reliance, or to arrange insurance contracts, or to hold out that it was authorised to arrange insurance contracts; and
(d)acknowledged that it was not an authorised representative, or a partner, employee or agent of PSC Australian Reliance.
On 28 April 2017, the Supreme Court of Queensland ordered that LPC be wound up and Morgan Lane of Worrells Solvency and Forensic Accountants was appointed liquidator. A liquidator’s report noted that the total indebtedness of the company was between $250,000 and $500,000 and that the reason for LPC’s inability to pay debts was poor strategic management of the business and poor financial control including lack of records. The liquidator also noted that the former director [the Applicant] had registered a new entity and continued the same business, transferring clients to the new business without paying any consideration to the liquidated entity. On 5 May 2017, the liquidator wrote to the Applicant explaining her responsibilities as a director of a company in liquidation.
On 10 May 2017, PSC Australian Reliance formally terminated the Referrer Agreement with LPC by sending letters to the Applicant and the liquidator. PSC Australian Reliance lodged a proof of debt with the liquidator of LPC for $254,814.50 in unpaid premiums.
On 12 May 2017, PSC Australian Reliance lodged a significant breach report with ASIC concerning its arrangements with LPC.
LPCs arrangement with FD Beck
The second arrangement between LPC and a broker commenced in July 2016, when LPC entered into an arrangement with FD Beck. There was no written agreement and no appointment of LPC to act as an authorised representative of FD Beck. FD Beck believed that LPC was an authorised representative of another AFSL holder and advised the Applicant that LPC could only offer quotations for insurance to clients of LPC on an offer and acceptance basis.
LPC arranged insurance for clients of LPC in the same manner as previously, that is LPC replaced the FD Beck invoice with an LPC invoice containing LPC’s banking details.
In October 2016, there was a dispute between LPC and FD Beck about LPC issuing its own invoices and outstanding amounts owing to FD Beck. On 24 October 2016, a representative of FD Beck wrote to the Applicant stating that premiums totalling $52,638.60 in respect of 37 policies had not been received.
On 25 October 2016, the Applicant responded disputing the amount owing and stating that FD Beck’s services were no longer required.
On 27 October 2016, FD Beck lodged a breach report with ASIC concerning its arrangements with LPC.
The relationship between LPC and these two insurance brokers, and LPC’s operations, form the basis of the Respondent’s case. However, after ASIC had commenced its investigation into the Applicant, the Applicant incorporated a new company, LPG, and continued to operate a business which she described as exactly what I was doing with PSC.
LPG
On 8 May 2017, 10 days after LPC was ordered to be wound up and a liquidator was appointed, LPG was incorporated. The Applicant is the sole director and company secretary. She holds four of the 10 shares in LPG and the other six shares are held by her son.
The liquidator of LPC wrote to the Applicant on 20 May 2017 stating that LPG was alleged to be using intellectual property assets of LPC, and demanding that the use stop.
On 6 June 2017, the Applicant sent an email to clients of LPC, identifying herself as CEO of LPG, that stated:
Dear valued client […]
Landlord Protection & Collection was placed into liquidation on 28 April 2017 due to debtors, primarily PSC Insurance Brokers and the Property Club, not complying with their payment obligations to LPC. […]
For those that have placed applications with Landlord Protection Group we are in the process of finalising arrangements with a new broker dedicated to serving you better as a client with the possibility of additional coverage options not previously available. We will be in touch with you regarding the invoicing and payment arrangements for these policies separately. Landlord Protection Group is in full compliance with its regulatory obligations.
Please do not hesitate to contact us at [email protected] if you have any further queries regarding your cover.
In June 2017, LPG entered into arrangements with Whitbread, an insurance broker and AFSL holder. On 9 June, Whitbread appointed LPG as an authorised representative. The agreement was signed by the Applicant as the director of LPG. The agreement authorised LPG to provide general product advice concerning landlord and short-term letting insurance products. On 13 June, Whitbread became aware of the Applicant’s previous banning order, the Applicant’s criminal conviction, and that she had been a director of two companies that had been wound up. On 22 June, Whitbread cancelled the authorised representative agreement with LPG, effective 22 July 2017.
In August 2017, LPG entered into an agreement with PIP, a corporate authorised representative of Fitzpatrick & Company Insurance Brokers Pty Ltd, an AFSL holder. The agreement, titled Originator/Administrator Agreement, and dated 29 August 2017, stated that LPG was not authorised to provide any financial services to clients and was authorised solely to bring the existence of the PIP Landlords Loss of Rent Insurance product to the attention of their clients and to register their Landlords (sic) requirements into the PIP system.
In July 2017 and at the date of the ASIC hearing (October 2017), the LPG website contained information in almost identical terms to the website of LPC, including the following:
Landlord Protection Group offer a wide range of cost-effective solutions for residential and commercial landlords…..
Our services and support options include:
* landlord insurance
* building insurance
Services include landlord insurance and short-term/holiday property insurance.
LPG was deregistered on 30 September 2019.
Except for a short period when LPG was an authorised representative of Whitbread, at no time has the Applicant, LPC or LPG held an AFSL or otherwise been authorised as required under the Corporations Act to provide financial services.
APPLYING THE LAW
Has there been non-compliance with a financial services law, s 920A(1)(e)?
ASIC contends that s 920A(1)(e) is enlivened because the Applicant:
(a)… failed to comply with a financial services law because she provided financial services (arranging insurance contracts) on behalf of LPC, without any applicable Australian financial services licence (AFSL), authorisation or other exemption; and
(b)… through LPC, engaged in misleading or deceptive conduct in at least three different ways (which were all related to the conduct of LPC’s business).
ASIC does not advance any authority for the proposition that an employee or officer of a company who, in that role, causes a company to breach financial services laws is personally to be regarded as having breached financial services laws.
In circumstances where there are dual tests, personally breaching financial services laws and being involved in breaches of financial services laws by others, and no authority is advanced in support of ASIC’s contention, and given the conclusions reached concerning the Applicant’s involvement in breaches of financial services laws by others below, the Tribunal considers it unnecessary to embark on an excursion into whether s 920A(1)(e) allows lifting corporate veils and attributing responsibility for breaches of financial services laws by entities to the individuals who transact the relevant business that constitutes the illegal behaviour.
Has there been involvement in non-compliance with a financial services law by another person, s 920A(1)(g)?
ASIC contends that the Applicant:
(a)was the sole director and shareholder, and controlling mind, of LPC;
(b)held sole responsibility for the management of LPC, the direction of its employees, the content of its website, and control of its finances;
(c)was responsible for entering into arrangements with the brokers, including signing the Referral Agreement with PSC; and
(d)was involved in all the financial and other arrangements made by LPC.
and that it follows that Ms Burnell was directly and knowingly concerned in the [relevant] contravention[s] by LPC.
ASIC contends that LPC has not complied with, that is has breached, a financial services law, namely ss 911A and 911B which prohibit carrying on a financial services business unless licensed or authorised. Failure to comply with these provisions is an offence and contravention is also a civil penalty provision. ASIC also asserts LPC contravened s 1041H which prohibits engaging in conduct in relation to a financial product or a financial service that is misleading or deceptive or is likely to mislead or deceive. ASIC contends that LPC misled clients: by not revealing who was issuing the insurance; by charging clients amounts that differed from the premium being charged by the broker without informing the clients; and by failing to disclose to the brokers, inter alia, that LPC was issuing its own invoices.
The parties agree that LPC was providing a financial service[22] by arranging to issue a financial product,[23] namely a contract of insurance.
[22] As defined by Corporations Act s 766C.
[23] As defined by Corporations Act s 764A(1)(d).
The Applicant claims that LPC was an authorised representative of PSC Australian Reliance. The Applicant acknowledged that the only written agreement between LPC and PSC Australian Reliance was a Referrer Agreement, but argued that because LPC acted in the way an authorised representative acts, and because PSC Australian Reliance acquiesced in LPC acting in that way, that LPC was in fact an authorised representative. The Applicant also claimed that there was an earlier authorised representative agreement between LPC and Australian Reliance but conceded that that agreement had not been executed.
The Applicant’s claim ignores the Corporations Act requirements that an authorisation to provide financial services on behalf of an AFSL holder must be in writing[24] and lodged with ASIC within 15 business days.[25] Here, the only written agreement between LPC and PSC Australian Reliance states it is a Referrer Agreement and the terms of that agreement are consistent with it being an agreement to refer clients to PSC Australian Reliance and not an authorisation to act as a representative. There was no written agreement between LPC and FD Beck. To argue that LPC acted as an authorised representative is to concede that LPC contravened the Corporations Act.
[24] Corporations Act s 916A.
[25] Corporations Act s 916F.
The fact that the brokers were aware that LPC was issuing contracts of insurance is not relevant to the Applicant’s lack of appropriate authorisation. To argue that another party may have contravened the law or been involved in the contravention, does not relieve the service provider of ensuring that it complies with the law. Conduct of other parties, is of course, a matter for the regulator.
ASIC contends that LPC contravened a financial services law by arranging contracts of insurance when neither the Applicant nor the companies were authorised to do so. The Tribunal finds that it was LPC that arranged the insurance rather than the Applicant. The Tribunal concludes that when LPC arranged contracts of insurance with clients, it did not comply with ss 911A and 911B, as it was not an AFSL holder or an authorised representative of an AFSL holder.
In relation to contravention of s 1041H, engaging in conduct, in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive, ASIC submits that LPC:
(a)concealed from clients the true position regarding their insurance policies: namely, that LPC was not issuing the insurance policies, that it was not an insurer or broker, and that the premiums charged on its invoices were often not the amounts quoted or charged by the insurer;
(b)on at least some occasions charged additional fees to clients, above the premium charged by the insurer, without disclosing those fees; and
(c)did not tell the brokers that it was issuing replacement invoices nor charging additional fees without disclosing them to the client.
The only matter that was disputed by the Applicant relates to the knowledge of PSC Australian Reliance that LPC was issuing its own invoices, charging clients directly, and adding on additional fees. As already noted, the extent to which brokers were aware of LPC’s activities, particularly the finer details of them, is not clear. However, in relation to the claims relating to advertising of services, the issuing of invoices, and overcharging some clients, the Tribunal concludes that LPC contravened s 1041H.
ASIC contends that as the Applicant was the sole director and controlling mind of LPC, she was involved in each of the contraventions, that is, she was knowingly concerned in or party to the contravention.[26] That phrase has recently been considered by Moshinsky J in Australian Securities and Investments Commission v Wealth & Risk Management Pty Ltd (No 2).[27] His Honour concluded that a person will be knowingly concerned in a contravention if that person was an intentional participant in the contravention, with knowledge of the essential elements constituting the contravention at the time of the contravention. Further, he held that the person does not need to know that the essential elements amount to a contravention.
[26] Corporations Act s 79.
[27] [2018] FCA 59, [130].
Given the role of the Applicant as the sole director and controlling mind of LPC, her responsibility for entering into the arrangements with the brokers, and her sole responsibility for the management and operation of LPC, the Tribunal concludes that the Applicant was involved in the contraventions of ss 911A and 911B and s 1041H of the Corporations Act by LPC.
Is there reason to believe that the Applicant is likely to contravene or likely to become involved in a contravention of a financial services law, s 920A(1)(f) and (h)?
ASIC contends that the evidence provides compelling reasons to believe that [the Applicant] is likely to contravene a financial services law, either directly or through a new company.
The relevant contraventions on which ASIC relies to forecast the likelihood of future misconduct are by the Applicant’s Companies, although as the sole director and controlling mind of those companies, the Applicant was involved in the contraventions.
The evidence before the Tribunal suggests that there is reason to believe that companies controlled by the Applicant are likely to contravene a financial services law and that the Applicant is likely to be involved in that contravention, including:
(a)the conduct engaged in by the relevant companies, LPC and LPG, is the same as the conduct that led to the previous banning order of the Applicant from 2011 to 2014 which related to the affairs of P&C;
(b)when put on notice by brokers in 2017 and by ASIC that had commenced its investigations in early 2017, the Applicant through the companies she controlled, continued to engage in the same conduct; and
(c)the Applicant has demonstrated a failure to appreciate the significance of the non-compliance.
The Tribunal concludes that there is reason to believe that companies controlled by the Applicant are likely to contravene a financial services law and that the Applicant is likely to be involved in that contravention.
That being the case the conditions in s 920A(1)(h) are satisfied. For the same reasons it is unnecessary to deal with contentions concerning s 920A(1)(e), it is not necessary to consider s 920A(1)(f).
Section 920A(1) conclusions
It is beyond controversy that the Applicant’s Companies did not have AFSLs, or formal appointments as authorised representatives of AFSL holders, except for the short period that LPG was an authorised representative of Whitbread. It is also beyond serious controversy that the Corporations Act requires authorisation as a representative of an AFSL holder to be in writing. The Applicant’s defence to the effect that her Companies acted as authorised representatives and therefore must have been authorised representatives is meritless. If such a defence could be maintained, every person who acted in breach of the requirements of the Corporations Act could be said to have the requisite authorisation because of the very actions that were unauthorised.
LPC also breached s 1041H of the Corporations Act as noted.
In these circumstances, where there have been multiple breaches of the Corporations Act by the Applicant’s Companies, with the Applicant involved in all of them, and where the Applicant defends what has been done on the basis advanced to the Tribunal, the correct conclusion to reach is that without restraint, there is reason to believe that the Applicant would again, in the future, be involved in further breaches. In these circumstances, the foundation for a banning order of some kind pursuant to ss 920A(1)(g) and (h) is made out, and because of this conclusion, it is not necessary to consider ss 920A(1)(d) and (da).
Section 920B
The scope and term of a ban remain to be considered.
The Applicant has:
(a)been banned from providing financial services previously;
(b)emerged from the ban repeating the offending behaviour;
(c)compounded that repeat offending behaviour through multiple companies that engaged in the offending behaviour after emerging from her first ban;
(d)caused her offending companies to engage in behaviour charging insurance premiums that was misleading and deceptive; and
(e)maintained that acting without the requisite authorisation formality is permissible.
In these circumstances, the appropriate banning order is one that embraces all financial services activities and is permanent.
NON-PUBLICATION
The Applicant requested that the Tribunal make a non-publication order, presumably against the Respondent, on the basis that this might jeopardise her prospects of gaining employment. The Tribunal notes that it may make orders concerning non-publication of information relating to a proceeding (under s 35 of the Administrative Appeals Tribunal Act 1975 (Cth)) but that the default position is that hearings are held in public, evidence, and documents produced to the Tribunal should be made public and that the reasons for the decision should be published. ASIC has a duty under the Corporations Act to publish a notice in the Gazette when a banning order is made (s 920E) and to maintain a register of persons who are subject to banning orders (s 922A). The Full Court of the Federal Court has confirmed the importance of the public being informed about ASIC’s banning decisions even when an application for review is pending: see Australian Securities and Investments Commission v Administrative Appeals Tribunal.[28] In that case, Downes and Jagot JJ stated:
The requirement for publication in the Gazette [as required by s 920E] shows that the legislature considered that publication of a banning order was important. Publications in the Gazette will frequently be followed by publication in the commercial media. This is consistent with the need for a fully informed market. It accordingly seems to us that informal publication by ASIC as well as mandated publication is nevertheless an aspect of the operation and implementation of the banning order.[29]
[28] [2009] FCAFC 185.
[29] [2009] FCAFC 185, [81].

The Applicant has not demonstrated any compelling reason for non-publication by ASIC in the Gazette, in the banned or disqualified register or by way of a media release.
DECISION
The Tribunal affirms the decision under review.

I certify that the preceding seventy four (74) paragraphs are a true copy of the reasons for the decision herein of F D O'Loughlin QC, Deputy President, Professor A O'Connell, Senior Member

......................[sgd]..................................................
Associate
Dated: 19 October 2020

Dates of hearing: 19 & 20 August 2020

Date final submissions received: 11 September 2020

Applicant: Self-represented

Counsel for the Respondent: Mr Tim Farhall

Solicitors for the Respondent: ASIC Administrative Law Team

Dates of hearing:	19 & 20 August 2020
Date final submissions received:	11 September 2020
Applicant:	Self-represented
Counsel for the Respondent:	Mr Tim Farhall
Solicitors for the Respondent:	ASIC Administrative Law Team