Parker and Australian Securities and Investments Commission
[2016] AATA 983
•1 December 2016
DIRECTION
TRIBUNAL: Senior Member CR Walsh
DATE: 14 December 2016
PLACE: Perth
The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975, to alter the text of the decision in this application as follows:
- The reference to McBride v Watson (Unreported, delivered 15 July 1994, BC 9402907), under the heading CASES, should read McBride v Walton (NSWCA Unreported, delivered 15 July 1994, BC 9402907); and
- The reference to $1,406.54.67 at paragraph 48 should read $1,406.54.
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Senior Member
Parker and Australian Securities and Investments Commission [2016] AATA 983 (1 December 2016)
Division
TAXATION & COMMERCIAL DIVISION
File Number
2016/2598 & 2016/2599
Re
Grant Parker
APPLICANT
And
Australian Securities and Investments Commission
RESPONDENT
DECISION
Tribunal Senior Member CR Walsh
Date 1 December 2016 Place Perth The Tribunal affirms the decisions under review.
..................[Sgd]......................................................
Senior Member CR Walsh
CATCHWORDS
Permanent banning order prohibiting applicant from engaging in any “credit activity” – permanent banning order prohibiting the applicant from providing any “financial services” – decisions under review affirmed
LEGISLATION
Australian Securities and Investments Commission Act 2001 - s 12DA
Australian Securities and Investments Regulations 2001 - reg 2B
Corporations Act 2001 – s 761A - s 763A – s 763C – s 764A(1)(d) – s 766A – s 766B – s 766C – s 913 - s 920A – s 920B - s1041HNational Consumer Credit Protection Act 2009 – s 5 – s 33 - s 37(2)(a) to (f) – s 80 – s 81
CASES
ASC v Kippe (1996) 20 ACSR 679
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Clearihan v Registrar of Motor Vehicle Dealers (ACT) (1994) 122 ACTR 25
Dollas-Ford and Australian Securities and Investments Commission [2006] AATA 704
Felden v ASIC (2003) AATA 301
HIH Insurance Ltd and HIH casualty and General Insurance Ltd, Australian Securities Investments Commission v Adler (2002) 42 ACSR 80; [2002] NSWSC 483
Hughes & Vale Pty Ltd v New South Wales (No 2) (1955) 93 CLR 127
Irving v Minister for Immigration, Local Government and Ethnic Affairs (1996) 139 ALR 84
Kippe v ASC (1997) 16 ACLC 190
McBride v Watson (Unreported, delivered 15 July 1994, BC 9402907)
Melbourne v The Queen (1999) 198 CLR 1
Musumeci v ASIC [2009] AATA 524R v Davis (1947) 75 CLR 409
SECONDARY MATERIALS
ASIC Regulatory Guide 98 – Licensing: Administrative action against financial service providers
ASIC Regulatory Guide 204 - Applying for an varying a credit licence
ASIC Regulatory Guide 218 – Licensing: Administrative action against persons engaging in credit activities
REASONS FOR DECISION
Senior Member CR Walsh
1 December 2016
INTRODUCTION
On 20 April 2016, the Australian Securities and Investments Commission (ASIC) made:
(i)a banning order against Mr Parker permanently prohibiting him from engaging in any credit activity pursuant to s 80 and s 81 of the National Consumer Credit Protection Act 2009 (the Credit Act) (the Credit Activity Decision); and
(ii)a banning order against Mr Parker permanently prohibiting him from providing any financial services pursuant to s 920A and s 920B of the Corporations Act 2001 (the Corporations Act) (the Financial Services Decision).
On 19 May 2016, Mr Parker applied to the Administrative Appeals Tribunal (the Tribunal) for a review of the Credit Activity Decision (2016/2599) and the Financial Services Decision (2016/2598).
FACTUAL BACKGROUND[1]
[1] These facts are extracted from the “Respondent’s Statement of Facts, Issues and Contentions”, dated 19 September 2016.
Jeremy (WA) Pty Ltd (ACN 123 808 953), trading as “Get Approved Finance” (Get Approved), is the holder of Australian Credit Licence (ACL), number 381700, issued on 1 October 2010.
Get Approved is licensed to conduct a business of providing credit services as an intermediary to consumers. It provided credit services under the relevant Western Australian legislation prior to the introduction of the Credit Act.
Mr Parker was employed by Get Approved as a finance broker periodically between 16 August 2010 and May 2014, as follows:
· Mr Parker commenced employment with Get Approved on 16 August 2010 (at 24 years of age) and resigned in November 2011;
· Mr Parker re-commenced employment with Get Approved on 16 January 2012 and resigned on 20 September 2013; and
· Mr Parker re-commenced employment with Get Approved in January 2014 and resigned in May 2014.
Mr Parker’s role as a finance broker with Get Approved involved, among other things, submitting loan applications to Esanda, a division of Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) (Esanda), on behalf of client consumers.
The loans Mr Parker arranged for individuals through Esanda were secured loans and predominately related to motor vehicle financing.
Under the terms of a “Business Partner Accreditation Agreement” entered into between Get Approved and Esanda:
· Get Approved was appointed as an originator authorised to refer consumers or submit applications on their behalf to Esanda for “Asset Finance Products”; and
· Get Approved employees could only submit applications to Esanda after being approved as an “authorised officer”.
Once approved, an authorised officer was given access to Esanda's online finance broker portal known as “EsandaNet” (also described occasionally as “Abacus”).
On or about 1 February 2012, Mr Parker completed and submitted an application form to Esanda requesting access to EsandaNet. In completing the application, Mr Parker signed several appended declarations, including “Appendix C: Esanda Secured Car Loan product statement declaration”, in which he declared:
I,..., hereby declare I will never, under any circumstances, misrepresent, including by omission, any of the key features and obligations of the product to any customer, potential customer, guarantor potential guarantor, related party, representative or agent of the customer or guarantor.
Mr Parker was paid a base salary (of $40,000 per annum plus superannuation) by Get Approved and a commission calculated by reference to the revenue he generated from arranging finance loans with Esanda and selling insurance and warranty products. More specifically, Mr Parker’s commission was calculated as follows:
25% inclusive of super for any writings each month in excess of 15K
Each of the loan applications submitted by Mr Parker to Esanda in the course of his employment with Get Approved was accompanied by a “Settlement Fax Checklist”, signed by him, which particularised all of the documents required by Esanda before it would be prepared to settle a loan, including, among other things:
·loan contract documents;
·a credit assessment report in respect of the proposed borrower; and
·an invoice addressed to the proposed borrower from the person (generally a car yard) who was to supply the vehicle and receive the disbursed loan funds.
At all relevant times, Esanda had a policy permitting guarantors to support the credit worthiness of primary borrowers, but not to demonstrate a borrower's capacity to service the loan. Esanda’s policy required each of the primary applicant and any guarantor to demonstrate capacity to service the loan independently of each other.
During the period in which Mr Parker was employed by Get Approved, Get Approved was also an authorised representative of Swann Insurance (Aust) Pty Ltd (ACN 000 886 680) (Swann). This authorisation commenced on 4 November 2009 and ceased on 11 July 2013. Swann is the holder of Australian Financial Service Licence (AFSL) number 238292.
The AFSL granted by ASIC to Swann under s 913B of the Corporations Act authorises Swann to:
· provide financial product advice in respect of certain stipulated financial products, including general insurance and consumer credit insurance products;
· deal in the stipulated financial products by applying for, acquiring, varying or disposing of such financial products; and
· provide custodial or depository services, other than investor directed portfolio services, to retail and wholesale investors.
As an employee of Get Approved, Mr Parker provided financial product advice and dealt in financial products as part of the business carried on by Get Approved.
More particularly, in the course of acting as a finance broker for Get Approved, Mr Parker:
(a)provided prospective loan applicants with advice concerning:
(i) credit contracts for the financing of motor vehicles; and
(ii)general insurance, consumer credit insurance and extended warranties; and
(b)arranged the issue of:
(i)credit contracts to finance the purchase of motor vehicles; and
(ii)motor vehicle insurance and extended warranties.
Settlement of the Esanda secured vehicle loans required the relevant vehicle to be covered by comprehensive insurance. This requirement was detailed in the “Settlement Fax Checklist” signed by Mr Parker and submitted to Esanda with each loan application: refer to paragraph 12 above.
As an employee Get Approved, Mr Parker was authorised to write insurance policies and provide general motor vehicle insurance advice on behalf of Swann. Mr Parker had access to the "Activ8" portal, which is Swann's front-end intermediary insurance policy creation portal, for this purpose.
Third party loans
On at least 30 to 40 occasions during the course of his employment with Get Approved, Mr Parker engaged in a practice known as arranging "third party loans" whereby he would advise a person seeking a loan to fund the purchase of a motor vehicle (the Client), who was to Mr Parker’s knowledge not sufficiently creditworthy to meet Esanda’s requirements for such a loan, that he could broker a credit contract for the Client if the Client could arrange another person (the Third Party) to agree to act as a guarantor in respect of that credit contract.
Mr Parker would then obtain the personal and financial details of the Third Party under the false pretext of the Third Party supporting the Client's loan application as a guarantor, in circumstances where at all times it was Mr Parker’s intention to submit a loan application to Esanda in the name of the Third Party, rather than the Client, without the knowledge or consent of the Client, the Third Party or Esanda.
To give effect to this arrangement, Mr Parker:
(i)prepared, or caused to be prepared, loan application documents in the name of the Third Party, as borrower, using the personal and financial details supplied to him by the Third Party under the misapprehension that they were to be named as a guarantor on a loan application for the Client;
(ii)arranged for the Third Party to sign the loan application and other supporting documents under the misapprehension that they were to be named as a guarantor on a loan application for the Client;
(iii)arranged for the Client to sign a copy of the loan application and other supporting documents for the purpose of maintaining the pre-text that the loan was being applied for in the name of the Client in circumstances where the loan application and documents signed by the Client were never submitted to Esanda and were not retained on the Get Approved file;
(iv)arranged for the Client to sign a direct debit authority authorising the repayments in respect of the loan in the name of the Third Party to be debited from a bank account belonging to the Client (the Direct Debit Authority);
(v)arranged for the car dealerships to supply to him directly, and without the knowledge or consent of the Client or the Third Party, a tax invoice which falsely named the Third Party as the buyer of the vehicle (the False Invoice); and
(vi)submitted the loan application and supporting documentation in the name of the Third Party, including the Direct Debit Authority and False Invoice, to Esanda for approval and settlement of the loan, in circumstances where he knew that Esanda would not approve and settle a loan application if it appeared to Esanda that someone other than the person named in the loan application was to become the owner of the financed vehicle.
As a consequence of Mr Parker giving effect to the third party loan arrangement. in the manner described above:
(i)a loan would be approved by Esanda and settled in the name of the Third Party as borrower without the knowledge or consent of the Third Party in circumstances where the Third Party believed that they were acting as guarantor only;
(ii)the funds advanced by Esanda pursuant to the loan would be applied to purchase a vehicle in the name of the Client without the knowledge or consent of Esanda who were led to believe that the purchaser of the vehicle was the Third Party and that Esanda would be taking effective security over the vehicle in respect of their loan to the Third Party; and
(iii)Get Approved would be paid a loan origination fee by Esanda in respect of the loan.
At various times in the course of his employment with Get Approved, Mr Parker was assisted by his then team leader Mr Eoin Carroll (Mr Carroll) to finalise and submit to Esanda the application in relation to third party loans which he had facilitated.
Under this arrangement, Mr Parker would communicate with the Client and the Third Party directly in order to obtain their personal and financial information, which would then be provided by Mr Parker to Mr Carroll, who would input the information into EsandaNet using his own login credentials, prepare documents for the Client and Third Party to sign, collate the executed documents and submit the loan applications to Esanda.
These loans would therefore be reflected as having been submitted by Mr Carroll in circumstances where they had nonetheless been facilitated by Mr Parker.
Unsolicited insurance & warranty arrangements
Whilst working at Get Approved, Mr Parker engaged in a practice of issuing and financing the cost of financial products (in particular insurance policies and warranties), without the knowledge or consent of his clients in respect of loans which he brokered.
As a result, a client’s loan would be inappropriately inflated by the amount of the premiums payable in respect of each of the financial products issued without consent and the amount of interest payable by the client in respect of the loan would be increased.
Mr Parker engaged in this practice for his own financial gain and to protect his employment at Get Approved.
Mr Parker was aware clients were unlikely to read their credit contracts and associated documents closely, and therefore relied upon their naivety and trust to perpetrate this dishonest conduct.
Mr Parker also took steps to conceal the issuance and cost of the unsolicited financial products by:
(i)only informing clients of the total periodic repayment amount owed under the credit contracts with no explanation as to how that amount was derived; and
(ii)extending the term of the loans so as to reduce the periodic repayment amounts, and thereby increasing the interest cost of the loan.
Mr Parker engaged in this practice in respect of approximately half of all of the loans he brokered during his employment with Get Approved.
Four specific “third party loan” transactions
Four specific “third party loan” transactions brokered by Mr Parker are outlined in further detail below.
(i) Transaction 1- The White/Hardy third party loan
In respect of Transaction 1, the Client was Mr Steven White (Mr White) and the Third Party was Mr White’s friend, Mr Phillip John Hardy (Mr Hardy). The salient facts, in respect of Transaction 1, are as follows.
On or about 30 March 2012, Mr White contacted Get Approved for assistance with obtaining a car loan and was assisted by Mr Parker.
Mr White informed Mr Parker that he was on a pension and not working. Mr Parker, who was aware that Mr White would probably be assessed as unsuitable for a loan from Esanda because of his employment status, nevertheless he advised Mr White that he could broker a loan in Mr White’s name if another person was prepared to act as a guarantor for Mr White.
In reliance upon Mr Parker’s advice, Mr White contacted his friend, Mr Hardy, who agreed to be named as a guarantor in respect of the loan to Mr White. During a subsequent telephone conversation, Mr White advised Mr Parker of the fact that Mr Hardy had agreed to act as a guarantor.
On 30 March 2012, Mr Hardy sent an email to Mr White attaching a document, titled "Filled form from Guarantor", which contained his personal and financial information. Mr Hardy provided that document to Mr White on the understanding that the information was required for him to act as a guarantor for Mr White's loan.
Mr White forwarded this email and attachment to Mr Parker on the same date.
Mr Parker, without the knowledge or consent of either Mr Hardy or Mr White, used Mr Hardy's personal and financial information to generate an Esanda loan application and contract in his name (the Hardy Loan Contract).
Mr Parker then sent an email to Mr White attaching several documents for signing by both Mr White and Mr Hardy, including:
(i)the Hardy Loan Contract;
(ii)a Direct Debit Request form bearing Mr White's handwritten name; and
(iii)documents, in duplicate, naming both Mr White and Mr Hardy as applicants or borrowers, including:
i. a privacy consent form;
ii.the signing page of an “Esanda Credit Application and Assessment Report”; and
iii.a “Get Approved Quote Acceptance form”.
Mr White forwarded the documents to Mr Hardy, who upon reading them, became concerned that he appeared to be identified as the loan applicant. Mr Hardy spoke with Mr White about this issue and stated that he was not prepared to be named as the borrower in order to finance a vehicle for Mr White's benefit.
When contacted by Mr White for clarification in respect of Mr Hardy’s concern, Mr Parker assured him that the naming on the documents was a formality and Mr Hardy would still be acting as a guarantor.
On 30 March 2012, without the knowledge or consent of either Mr Hardy or Mr White, Mr Parker sent an email to Pickerings, the dealership from which Mr White was intending to purchase the vehicle, requesting it to issue a tax invoice for the vehicle addressed to Mr White and Mr Hardy, jointly at Mr Hardy's residential address.
By reply email, an employee of Pickerings provided Mr Parker with the requested tax invoice.
Mr Parker then altered the invoice provided to him by Pickerings by removing Mr White's name from the invoice (the False Hardy Invoice).
On 31 March 2012, Mr Hardy and Mr White signed the documents Mr Parker had emailed to Mr White in accordance with his instructions. Mr White signed documents in the mistaken belief that he was the loan applicant and Mr Hardy signed the documents in the mistaken belief that he was acting as a guarantor in support of Mr White's loan application.
On 2 April 2012, Mr Parker, without the knowledge or consent of either Mr Hardy or Mr White, used Swann's Activ8 portal to issue a motor vehicle insurance policy numbered 17287953 in Mr Hardy's name (the Hardy Insurance Policy) with a premium payable of $1,406.54.67.
Mr Parker issued the Hardy Insurance Policy despite the fact that Mr Hardy was not going to become the registered owner of the vehicle the subject of the policy, because the vehicle was being purchased by Mr White, and despite being told by Mr White that he had already obtained comprehensive insurance in respect of the vehicle from another insurer.
On 2 April 2012, Mr Parker, without the knowledge or consent of either Mr Hardy or Mr White, used Swann's Activ8 portal to issue a Gap Cover policy in Mr Hardy's name (the Hardy Gap Policy) with a premium payable of $999.
Mr Parker issued the Hardy Gap Policy despite the fact that Mr Hardy was not going to become the registered owner of the vehicle the subject of the policy, because the vehicle was being purchased by Mr White.
As a result of causing the Hardy Gap Policy to be issued, the principle of the loan approved in Mr Hardy’s name was increased by the amount of the premium payable, being the sum of $999.
On 2 April 2012, Mr Parker sent a facsimile to Esanda comprising various documents constituting a loan application in the name of Mr Hardy (the Hardy Settlement Documents), which documents included the:
(i)Hardy Loan Contract;
(ii)False Hardy Invoice; and
(iii)Direct Debit Request form, which had been altered from the one signed and provided by to Mr Parker by Mr White on 31 March 2012.
As a result of Mr Parker submitting the Hardy Settlement Documents to Esanda, Esanda approved and settled a loan in Mr Hardy's name on the same date.
Get Approved was paid a loan origination fee of $699 (inclusive of GST) by Esanda in respect of the loan issued to Mr Hardy.
The duplicate loan documents in Mr White's name, other than the Direct Debit Request form, were not retained on the Get Approved client file for record keeping purposes or submitted to Esanda as part of any loan application.
(ii) Transaction 2 – The Berwick /Foley third party loan
In respect of Transaction 2, the Client was Ms Samantha Foley (Ms Foley) and the Third Party was Ms Foley’s friend, Ms Anne-Marie Berwick (Ms Berwick). The salient facts, in respect of Transaction 2, are as follows.
On or about 1 May 2012, Ms Foley contacted Get Approved for assistance with obtaining a car loan and was assisted by Mr Parker.
Mr Foley provided Mr Parker with her personal and financial information.
Using that information, Mr Parker obtained a copy of Ms Foley’s Veda credit history report which confirmed that she had been discharged from bankruptcy in 2009 and also had two recorded defaults in respect of a telephone and credit card bill.
Mr Parker was therefore aware that Mr Foley would be assessed as unsuitable for a loan from Esanda because of her poor credit record. This is reflected in notes later made, likely by Mr Carroll, on an internal “Get Approved Action Record Sheet” to the effect that "Foley was declined".
Mr Parker, however, advised Ms Foley that he could broker a loan in her name if another person was prepared to act as a guarantor in respect of the loan.
In reliance upon that advice, Ms Foley spoke with her best friend, Ms Berwick, who agreed to be named as a guarantor in respect of Ms Foley's loan.
Ms Foley contacted Mr Parker to confirm Ms Berwick's agreement to assist.
On or about 12 May 2012, Ms Foley finalised the purchase of a vehicle from Commonwealth Motors which was to be financed by the loan being arranged by Mr Parker and Ms Foley sent the dealership an email with Mr Parker’s contact details and particulars of the amount to be financed.
On 14 May 2012, the dealership sent Mr Parker an email questioning Ms Foley's calculations in respect of the loan and requesting instructions regarding the preparation of a tax invoice for the vehicle.
By return email of the same date, Mr Parker, without the knowledge or consent of either Ms Foley or Ms Berwick, requested the dealership issue a tax invoice addressed jointly to both Ms Foley and Ms Berwick.
On 22 May 2012, Commonwealth Motors sent Mr Parker a facsimile enclosing a tax invoice addressed only to Ms Berwick as the purported buyer of the vehicle (the False Berwick Invoice).
On 21 May 2012, Ms Foley sent Mr Parker an email attaching certified copies of both her and Ms Berwick's driver’s licences and Medicare cards. On the same date, Mr Parker forwarded those documents to Mr Carroll.
Ms Berwick had provided this information on the understanding it was to be used to check her credit rating before she could be named as a guarantor in respect of a loan in the name of Ms Foley.
Mr Parker and, or, Mr Carroll used Ms Berwick's personal and financial information, without her knowledge or consent, to generate an Esanda loan application and contract in her name (the Berwick Loan Contract).
On 21 May 2012, Mr Parker sent an email to Ms Foley attaching several documents for her and Ms Berwick to sign, including:
(i)the signing page of the Berwick Loan Contract;
(ii)an Esanda loan contract in Foley's name (the Foley Loan Contract);
(iii)a Direct Debit Request form;
(iv)documents naming both Foley and Berwick as applicants or borrowers, being:
i.a privacy consent form;
ii.the signing page of an Esanda Credit Application and Assessment Report; and
iii.a Get Approved Quote Acceptance form.
After receiving Mr Parker’s email, Ms Berwick and Ms Foley telephoned and spoke to Mr Parker. During the course of that conversation, Mr Parker provided Ms Berwick and Ms Foley with instructions with respect to the execution of the documents.
Ms Foley signed the documents in accordance with Mr Parker’s instructions in the mistaken belief that she was the loan applicant.
Ms Berwick signed the documents in accordance with Mr Parker’s instructions in the mistaken belief that she was acting as a guarantor in support of Ms Foley's loan application.
On 23 May 2012, Ms Foley returned the signed documents to Mr Parker by email.
On the same date, Mr Parker, without the knowledge or consent of Ms Berwick, used Swann's Activ8 portal to issue a Gap Cover policy in Ms Berwick's name (the Berwick Gap Policy) with a premium payable of $2,095.
Mr Parker issued the Berwick Gap Policy despite the fact that Ms Berwick was not going to become the registered owner of the vehicle the subject of the policy, because the vehicle was being purchased by Ms Foley.
In the course of reviewing the loan documentation in her name, Ms Foley noticed a reference to an amount of $2,095 payable to Swann in respect of shortfall insurance. Ms Foley questioned Mr Parker about the additional amount financed under the loan relating to shortfall insurance and was advised by Mr Parker that shortfall insurance was a requirement for the loan to be approved, when in fact no such requirement existed.
As a result of Mr Parker’s explanation, Ms Foley acquiesced to the premium being financed under the loan.
As a result of causing the Berwick Gap Policy to be issued, the principle of the loan approved in the name of Ms Berwick was increased by the amount of the premium payable, being the sum of $2,095.
On 23 May 2012, Mr Parker forwarded the executed documents he had received from Ms Foley and Ms Berwick to Mr Carroll and Mr Carroll sent a facsimile to Esanda comprising various documents constituting a loan application in the name of Ms Berwick (the Berwick Settlement Documents), including:
(i)the Berwick Loan Contract;
(ii)the False Berwick Invoice;
(iii)the Direct Debit Request form, which had been altered from the one signed and provided by to Mr Parker by Ms Foley on 23 May 2012;
(iv)documents originally signed by both Foley and Berwick altered to remove Ms Foley's name and signature, being the:
i.privacy consent form; and
ii.“Esanda Credit Application and Assessment Report”.
As a result of Mr Carroll submitting the Berwick Settlement Documents, Esanda approved and settled a loan in Ms Berwick's name.
Get Approved was paid a loan origination fee of $699 (inclusive of GST) by Esanda in respect of the loan issued to Ms Berwick.
Neither the Foley Loan Contract or documents, in both Ms Foley's and Ms Berwick's names, were retained on the Get Approved client file for record keeping purposes or submitted to Esanda as part of any loan application.
(iii) Transaction 3 – The Joshua Van Dorrestein /Olaf Van Dorrestein third party loan
In respect of Transaction 3, the Client was Mr Joshua Van Dorrestein (Mr Joshua Van Dorrestein) and the Third Party was Mr Van Dorrestein’s father, Mr Olaf Johannes Gerades Van Dorrestein (Mr Olaf Van Dorrestein). The salient facts, in respect of Transaction 3, are as follows.
In or about March 2012, Mr Joshua Van Dorrestein contacted Get Approved for assistance with obtaining a car loan and was assisted by Mr Parker.
Mr Joshua Van Dorrestein informed Mr Parker that he was not employed at the time. Mr Parker was therefore aware that Joshua Van Dorrestein would be assessed as unsuitable for a loan from Esanda because of his employment status.
Mr Parker, however, advised Mr Joshua Van Dorrestein that he could broker a loan in his name if another person was prepared to act as a guarantor in respect of that loan.
When Mr Joshua Van Dorrestein queried Mr Parker what a guarantor was, Mr Parker clarified with words to the effect that it was a person who would be liable for the repayments on the loan in the event that he defaulted.
Mr Joshua Van Dorrestein spoke with his parents about whether either of them would be willing to be named as a guarantor for his loan application. His father, Mr Olaf Van Dorrestein, agreed to do so.
On or about 29 March 2012, Mr Joshua Van Dorrestein informed Mr Parker of Mr Olaf Van Dorrestein's agreement. As a result of that conversation, Mr Parker made a note, "Dad is going on loan", on an internal “Get Approved Action Record Sheet”.
On the same day, Mr Parker sent an email to Mr Joshua Van Dorrestein attaching a copy of a Get Approved client form for completion by Mr Olaf Van Dorrestein.
Mr Joshua Van Dorrestein returned the completed form to Mr Parker later that as an email attachment which had been named "Guarantor.pdf".
On 10 April 2012, without the knowledge or consent of either Mr Olaf Van Dorrestein or Mr Joshua Van Dorrestein, Mr Parker used Mr Olaf Van Dorrestein's personal and financial information to generate an Esanda loan application and contract in his name (the Olaf Van Dorrestein Loan Contract).
On the same day, Mr Parker sent an email to Mr Joshua Van Dorrestein attaching several documents for him and Mr Olaf Van Dorrestein to sign, including:
(i)the Olaf Van Dorrestein Loan Contract;
(ii)a duplicate signing page of the Olaf Van Dorrestein Loan Contract bearing Joshua Van Dorrestein's handwritten name; and
(iii)a privacy consent form with duplicate signing pages each respectively bearing Joshua Van Dorrestein's and Olaf Van Dorrestein's handwritten names.
Mr Joshua Van Dorrestein and Mr Olaf Van Dorrestein signed the documents in accordance with the instructions in Mr Parker’s email.
Mr Joshua Van Dorrestein signed those documents and provided Mr Parker with a copy of his driver’s licence and Medicare card in the belief that he was the loan applicant.
Mr Olaf Van Dorrestein signed those documents and provided Mr Parker with a copy of his driver’s licence, Medicare card and payslips in the belief that he was acting as a guarantor in support of Mr Joshua Van Dorrestein's loan application.
Also on 10 April 2012, Mr Parker received an email from Mr Trent Bunter (Mr Bunter), of Billy Bunter Auto City, attaching a copy of the tax invoice in respect of the vehicle to be purchased by Mr Joshua Van Dorrestein.
Without the knowledge or consent of either Mr Joshua Van Dorrestein or Mr Olaf Van Dorrestein, Mr Parker sent an email reply to Mr Bunter requesting that the tax invoice be addressed to Mr Olaf Van Dorrestein.
Mr Bunter provided Mr Parker with an amended tax invoice in the terms requested (the False Van Dorrestein Invoice).
On 11 April 2012, Mr Olaf Van Dorrestein sent Mr Parker an email attaching copies of the documents signed by himself and Mr Joshua Van Dorrestein.
On the same date Mr Parker sent a facsimile to Esanda comprising various documents constituting a loan application submitted on behalf of Olaf Van Dorrestein (the Olaf Van Dorrestein Settlement Documents), including the:
(i)The Olaf Van Dorrestein Loan Contract; and
(ii)The False Van Dorrestein Invoice.
As a result of Mr Parker submitting the Olaf Van Dorrestein Settlement Documents, Esanda approved and settled a loan in the name of Mr Olaf Van Dorrestein.
Get Approved was paid a loan origination fee of $699 (inclusive of GST) by Esanda in respect of the loan issued to Mr Olaf Van Dorrestein.
The duplicate documents in Mr Joshua Van Dorrestein's name were not retained on the Get Approved client file for record keeping purposes or submitted to Esanda as part of any loan application.
(iv) Transaction 4 – The Bacich/Needham third party loan
In respect of Transaction 4, the Client was Mr Mikel Lloyd Bacich (Bacich) and the Third Party was Mr Bacich’s brother-in-law, Mr Jayden Ronald Needham (Mr Needham). The salient facts, in respect of Transaction 4, are as follows.
On or about 19 May 2012, Bacich contacted Get Approved for assistance with obtaining a car loan and was assisted by Mr Parker.
Mr Parker obtained a copy of Mr Bacich’s Veda credit history report which confirmed he had a "serious infringement" recorded against his credit rating. This is reflected in a handwritten note, "Serious Credit Infr telstra", made by Mr Parker on an internal “Get Approved Action Record Sheet”.
Mr Parker was therefore aware that Mr Bacich would be assessed as unsuitable for a loan from Esanda because of his poor credit history.
Mr Parker, however, advised Mr Bacich that he could broker a loan in his name if another person was prepared to act as a guarantor.
As a result of Mr Parker’s advice, Mr Bacich spoke with Mr Needham who agreed to act as a guarantor for Mr Bacich's loan.
Mr Bacich subsequently informed Mr Parker of the fact that Mr Needham had agreed to act as a guarantor in respect of his loan application.
On 24 May 2012, Mr Parker sent an email to Mr Bacich requesting that he arrange for Mr Needham to complete the attached Get Approved client form.
The completed form was returned to Mr Parker by Mr Bacich by email on or about the same date.
On 25 May 2012, Mr Parker sent two emails to Autoscene, the dealership from which the vehicle was being purchased by Mr Bacich, requesting that it issue a tax invoice addressed jointly to Mr Bacich and Mr Needham.
By return email, an employee of Autoscene provided Mr Parker with copies of the Contract to Buy a Motor Vehicle signed by Mr Bacich and a joint tax invoice in the terms requested (the False Needham Invoice).
Mr Parker then provided those documents to Mr Carroll.
Without the consent of either Mr Bacich or Mr Needham, Mr Parker and/or Mr Carroll used Needham's personal and financial information to generate an Esanda loan application and contract in his name (the Needham Loan Contract).
On 25 May 2012, Mr Parker sent an email to Bacich attaching several documents for him and Mr Needham to sign, including:
(i)the signing page of the Needham Loan Contract;
(ii)an Esanda loan contract in Mr Bacich's name (the Bacich Loan Contract);
(iii)documents naming both Mr Bacich and Mr Needham as applicants or borrowers, being:
i.a privacy consent form;
ii.the signing page of an “Esanda Credit Application and Assessment Report”; and
iii.a “Get Approved Quote Acceptance” form.
On the same day, Mr Parker sent another email to Mr Bacich instructing him to return only the signing pages along with copies of his and Mr Needham's identification.
Mr Bacich and Mr Needham signed the documents. Mr Needham did so in the belief he was acting as a guarantor in support of Mr Bacich's loan application.
In signing the documents, Mr Bacich mistakenly signed the Needham Loan Contract.
On 26 May 2012, Mr Bacich sent Mr Parker an email attaching copies of the documents signed by himself and Mr Needham.
By reply email dated 28 May 2012, Mr Parker again requested that Mr Bacich forward to him copies of Mr Bacich’s and Mr Needham's identification.
After obtaining the identification, Mr Parker forwarded all of the documents to Mr Carroll.
On the same day, Mr Carroll sent a facsimile to Esanda comprising various documents constituting a loan application submitted on behalf of Mr Needham (the Needham Settlement Documents), including:
(i)the Needham Loan Contract, altered to remove Mr Bacich's name and signature on the signing page;
(ii)the False Needham Invoice, altered to remove Mr Bacich's name and address;
(iii)documents originally signed by both Mr Bacich and Mr Needham altered to remove Mr Bacich's name and signature, being the:
i.privacy consent form; and
ii.Esanda Credit Application and Assessment Report.
As a result of Mr Carroll submitting the Needham Settlement Documents, Esanda approved and settled a loan in Mr Needham's name.
Get Approved was paid a loan origination fee of $699 (inclusive of GST) by Esanda in respect of the loan issued to Mr Needham.
Neither the Bacich Loan Contract, or the documents in both Mr Bacich's and Mr Needham's names, were retained on the client file for record keeping purposes or submitted to Esanda as part of any loan application.
ISSUES
It is not in dispute that during his employment with get Approved , Mr Parker engaged in credit activities for the purpose of the Credit Act and provided financial services for the purpose of the Corporations Act.
(i) The Credit Activity Decision (2016/2599)
The issues for determination by the Tribunal in relation to the Credit Activity Decision (2016/2599) are:
(i)whether a banning order should be made against Mr Parker prohibiting him from engaging in any credit activity by reason of any one or more of the following:
i.that the Tribunal has reason to believe that by his conduct, Mr Parker has contravened any credit legislation and, or, has been involved in another person’s contraventions of any credit legislation;
ii.that the Tribunal has reason to believe that Mr Parker is likely to contravene any credit legislation and, or, be involved in the contravention of any credit legislation by another person; and
iii.that the Tribunal has reason to believe Mr Parker is not a fit and proper person to engage in credit activities; and
(ii)If yes to (i), what the terms of the banning order should be and, in particular, what the duration of the banning order should be.
(ii) The Financial Services Decision (2016/2598)
The issues for determination by the Tribunal in relation to the Financial Services Decision (2016/2598) are:
(iii)whether a banning order should be made against Mr Parker prohibiting him from providing any financial services by reason of any one or more of the following:
i.that the Tribunal has reason to believe that by his conduct Mr Parker has not complied with a financial services law and, or, has been involved in another person’s contraventions of a financial services law;
ii.that the Tribunal has reason to believe that Mr Parker is likely to contravene a financial services law and, or, be involved in the contravention of a financial services law by another person; and
iii.that the Tribunal has reason to believe that Mr Parker is not of good fame or character;
(iv)if yes to (iii), what the terms of the banning order should be and, in particular, what the duration of the banning order should be.
Each of these issues is considered, in turn, below.
CONSIDERATION
Mr Parker’s position
In his “Statement of Facts, Issues and Contentions”, undated, Mr Parker states:
It was Mr Parker’s belief that by telling the client they needed a guarantor and completing the documentation in the guarantor’s name that it was the correct procedure for a “guarantor” loan and was not misleading or deceiving. Specific training sessions were regularly conducted to teach the brokers how to complete this style of loan.
Mr Parker’s first loan at Get Approved finance, guided by Ashley Hoogendyk was a “guarantor loan”. If this loan style had developed further into Mr Parker’s employment you would assume he had learnt how to manipulate the system, given Mr Parker’s first loan was a guarantor loan he would not have had the knowledge or experience to know otherwise. A person new to the finance broking industry and trained in this manner would accept this was customary. Mr Parker would not have known to question his actions, this was all he knew and had no prior broking experience.
…
Mr Parker was unaware of the lack of compliance, as he expected Get Approved, the licence holder to be training their staff correctly and in accordance with the legislation relating to the licences held. Employees should not be expected to know the in depth legalities of a financial services and credit licence when it is the company which obtained it. Mr Parker only acted on behalf of Get Approved to the best of his ability based on what he was taught. Mr Parker expected the company to be taking their due diligence to uphold to strict ASIC financial service guidelines. It is only now that Mr Parker has matured and become more knowledgeable that he is now aware of the situation he was in. He feels mislead and taken advantage of by Get Approved and its management in order for them to make large profits and now leave its employees with the ramifications.
Mr Parker made similar submissions in his oral evidence at the hearing.
(i) The Credit Activity Decision
Power to make a banning order under the Credit Act
Section 80(1) of the Credit Act provides:
80 ASIC’s power to make a banning order
(1) ASIC may make a banning order against a person:
…
(d) if the person has:
(i) contravened any credit legislation; or
(ii)been involved in a contravention of a provision of any credit legislation by another person; or
(e) if ASIC has reason to believe that the person is likely to:
(i) contravene any credit legislation; or
(ii)be involved in a contravention of a provision of any credit legislation by another person; or
(f)if ASIC has reason to believe that the person is not a fit and proper person to engage in credit activities; or
The expression “credit legislation” is defined in s 5 of the Credit Act to include the Credit Act.
Section 80(2) of the Credit Act provides that if a person is a natural person, ASIC (and, in its shoes, the Tribunal) must have regard to the matters set out in s 37(2)(a) to (f) and s 37(2)(g)(i) of the Credit Act when deciding whether it “has reason to believe that a person is likely to”:
· contravene any credit legislation (for the purpose on s 80(1)(e)(i) of the Credit Act);
· be involved in a contravention of any credit legislation by another person (for the purpose on s 80(1)(e)(ii) of the Credit Act); and
· is not a fit and proper person to engage in credit activities (for the purpose of s 80(1)(f) of the Credit Act).
For the following reasons, the Tribunal finds that ASIC’s (and, in its shoes, the Tribunal’s) power to ban under s 80(1)(d), (e) and (f) of the Credit Act is enlivened in respect of Mr Parker in relation to the credit activities he was engaged in as an employee of Get Approved.
Section 80(1)(d)(i) and (ii) of the Credit Act – Whether Mr Parker has contravened any credit legislation or been involved in a contravention of a provision of any credit legislation by another person
Section 33 of the Credit Act (as in force at the relevant time) provided:[2]
[2] The equivalent provision is now s 160D of the Credit Act.
Prohibition on giving misleading information etc.
(1) A person (the giver) must not, in the course of engaging in a credit activity, give information or a document to another person if the giver knows, or is reckless as to whether, the information or document is false in a material particular or materially misleading.
Civil penalty: 2,000 penalty units.
Offence
(2) A person commits an offence if:
(a) the person gives information or a document to another person; and
(b) the person does so in the course of engaging in a credit activity; and
(c) the information or document is false in a material particular or materially misleading.
Criminal penalty: 100 penalty units, or 2 years imprisonment, or both.
As submitted by ASIC, the Tribunal finds that in respect of each of the third party loan transactions brokered by Mr Parker, Mr Parker committed multiple contraventions of s 33 of the Credit Act, in that Mr Parker, in the course of engaging in a credit activity, gave information or a document to another person in circumstances where he knew, or was reckless as to whether, that information or document was false in a material particular or materially misleading.
More particularly:
· Mr Parker falsely advised each of the Clients that:
i.he could broker a loan in the Client’s name despite knowing that Esanda would reject the Client’s loan application;
ii.the Third Party would be acting as a guarantor to support the Client’s loan application;
iii.the Client was required to sign the relevant loan application and supporting documents, and provide personal and financial information, because they would be the applicant for the loan, in circumstances where Mr Parker had no intention to make a loan application in the name of the Client and the documents signed by the Client were neither submitted to Esanda nor retained on the Get Approved client file; and
iv.the Third Party was required to sign the relevant loan application and supporting documents, and provide personal and financial information, in order to become a guarantor of the Client’s loan in circumstances where Mr Parker at all times intended to make a loan application in the name of the Third Party as the primary borrower;
· the settlement documents submitted to Esanda by Mr Parker, or Mr Carroll on Mr Parker’s behalf, in respect of each of the third party loan transactions brokered by Mr Parker:
i.falsely identified the Third Party as the primary borrower;
ii.falsely identified the Third Party as being the purchaser of the relevant vehicle;
iii.included a loan contract and other supporting documents signed by the Third Party under false pretences;
iv.included invoices which were false in a material particular, namely the identity of the purchaser of the relevant vehicle; and
v.in a number of cases, included documents which had been fraudulently altered or manipulated between their receipt by Mr Parker and their submission to Esanda.
Further, or alternatively, in respect of each of the third party loan transactions brokered by Mr Parker, which Mr Carroll submitted to Esanda on Mr Parker’s behalf, Mr Parker was involved in multiple contraventions of s 33 of the Credit Act by Mr Carroll, in that:
· the settlement documents submitted to Esanda by Mr Carroll contained false or misleading information as particularised;
· Mr Carroll knew, or was reckless as to whether, the settlement documents submitted to Esanda contained false or misleading information; and
· by reason of Mr Parker’s dealings with the Clients, the Third Parties and Mr Carroll, he:
i.aided or abetted any contravention of s 33 of the Credit Act committed by Mr Carroll; and/or
ii.was directly or indirectly, knowingly concerned in or party to any contravention of s 33 of the Credit Act committed by Mr Carroll.
In brokering 30 to 40 third party loan transactions during the course of his employment with Get Approved, Mr Parker engaged in a premeditated and repeated course of dishonest conduct calculated to induce:
· Third Parties to sign loan application documents under the false pretence that they would be acting as a guarantor for the Client; and
· Esanda to approve and settle loans, which would not otherwise have been approved, under the false pretence that the Third Party was the borrower and the purchaser of the vehicle against which the loan was secured.
Having regard to the above matters, the Tribunal is satisfied that the power to ban Mr Parker from engaging in credit activities under s 80(1)(d)(i) and/or (ii) of the Credit Act is enlivened.
Section 80(1)(e)(i) and (ii) of the Credit Act – Whether there is reason to believe that Mr Parker is likely to contravene any credit legislation or be involved in a contravention of a provision of any credit legislation by another person
Given the matters set out above, the Tribunal is satisfied that:
(i)Mr Parker has previously not complied with any credit legislation (in this case, the Credit Act);
(ii)Mr Parker intentionally misled his Clients, Third Parties and Esanda;
(iii)Mr Parker falsified documents;
(iv)Mr Parker conducted himself dishonestly;
(v)Mr Parker’s dishonest conduct was repeated, premeditated and occurred in order to deceive his Clients, Third Parties and Esanda;
(vi)Mr Parker’s dishonest conduct took place whilst he was employed by the holder of an ACL;
(vii)Mr Parker does not possess the honesty and integrity necessary to discharge the duties and obligations imposed by any credit legislation;
(viii)Mr Parker cannot be relied upon to honestly discharge the duties and obligations imposed by any credit legislation; and
(ix)Mr Parker cannot be relied upon to comply with any credit legislation which regulates the provision of credit services to the general public.
Accordingly, the Tribunal finds that there is reason to believe that Mr Parker is likely to:
(i) contravene any credit legislation; or
(ii)be involved in a contravention of a provision of any credit legislation by another person,
such that the power to ban Mr Parker from engaging in credit activities under s 80(1)(e)(i) and/or (ii) of the Credit Act is enlivened.
Section 80(1)(f) of the Credit Act – Whether there is reason to believe that Mr Parker is not fit and proper person to engage in credit activities
The meaning of the phrase "fit and proper person" was discussed by the High Court in Hughes & Vale Pty Ltd v New South Wales(No 2) (1955) 93 CLR 127 wherein Dixon CJ, McTiernan and Webb JJ said (at 156-157) that the word "fit", in relation to an office, involves honesty, knowledge and ability.
In Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Toohey and Gaudron JJ said (at 380):
The expression 'fit and proper', standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities. The concept of "fit and proper" cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur. The list is not exhaustive but it does indicate that, in certain contexts, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question.
Licensing provisions which contain a requirement that a person be a fit and proper person to work in a particular profession or occupation are directed both to the protection of the public and to the maintenance of professional standards for those granted a licence.
“ASIC Regulatory Guide 204 - Applying for and varying a credit licence”, dated February 2013 (ASIC Regulatory Guide 204), states:
RG 204.177To be a fit and proper person to engage in credit activities means that the person:
(a) is competent to operate a credit business (as demonstrated by the person’s knowledge, skills and experience);
(b) has the attributes of good character, diligence, honesty, integrity and judgement;
(c) is not disqualified by law from performing their role in your credit business; and
(d) either has no conflict of interest in performing their role in your credit business, or any conflict that exists will not create a material risk that the person will fail to properly perform their role in your credit business.
The Tribunal finds, as contended by ASIC, that the conduct engaged in by Mr Parker, as detailed above, demonstrates that he does not possess the attributes of good character, diligence, honesty, integrity and judgment referred to in RG 204.177(b) of ASIC Regulatory Guide 204.
Consequently, the Tribunal finds that it has reason to believe that Mr Parker is not a fit and proper person to engage in credit activities, such that the power to ban Mr Parker from engaging in credit activities under s 80(1)(f) of the Credit Act is enlivened.
(ii) The Financial Services Decision
Power to make a banning order under the Corporations Act
Section 920A(1) of the Corporations Act provides:
920A ASIC’s power to make a banning order
(1)ASIC may make a banning order against a person, by giving written notice to the person, if:
…
(d)ASIC has reason to believe that the person is not of good fame or character; 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.
The expression “financial services law” is defined in s 761A of the Corporations Act and includes, among other things, s 1041H of the Corporations Act and s 12DA of the Australian Securities and Investments Commission Act 2001 (the ASIC Act).
For the following reasons, the Tribunal finds that the power to ban under s 920A(1)(d), (e), (f), (g) and (h) of the Corporations Act is enlivened in respect of Mr Parker in relation to the financial services provided by him as an employee of Get Approved.
Section 920A(1)(d) of the Corporations Act – Whether there is reason to believe that Mr Parker is not of good fame or character
Section 920(1A) of the Corporations Act specifies the matters to which ASIC (an, in its shoes, the Tribunal) must have regard to when deciding whether it has reason to believe that a person is not of good fame or character, including, relevantly:
(c)whether a banning order or disqualification order under Division 8 has previously been made against the person;
The meaning of the expression “good character” was considered in Irving v Minister for Immigration, Local Government and Ethnic Affairs (1996) 139 ALR 84. Referring to the requirements in the Migration Act, 1958, Lee J said (at 94):
Unless the terms of the Act and the regulations require some other meaning be applied, the words `good character’ should be taken to be used in their ordinary sense, namely, a reference to the enduring moral qualities of a person, and not to the good standing, fame or repute of that person in the community. The former is an objective assessment apt to be proved as a fact, while the latter is a review of subjective public opinion... A person who has been convicted of a serious crime and thereafter held in contempt in the community, nevertheless may show that he or she has reformed and is of good character...Conversely, a person of good repute may be shown by objective assessment to be a person of bad character. (Emphasis added)
In Kippe v ASC (1997) 16 ACLC 190 the Tribunal held that a similar interpretation should be applied to the former s 829(e) of the Corporations Law, which permitted a banning order to be made against a person who was not of "good fame and character". The AAT commented (at 221):
Regard should be had to a person’s conduct, both criminal and general. In doing so, the focus needs to be upon his or her disposition and qualities than upon his or her reputation. In the context of the Law and its protection of the investor and in the context of the operation of the duties of a representative of a dealer, particular regard needs to be had to the person’s honesty, integrity and openness. (Emphasis added)
In Dollas-Ford and Australian Securities and Investments Commission [2006] AATA 704 the Tribunal discussed (at [27]-[28]) the proper approach to determine issues of “good fame and character”. In particular, the Tribunal referred to and applied the unreported decision of the NSW Court of Appeal in McBride v Watson (Unreported, delivered 15 July 1994, BC 9402907) where Kirby J (as his Honour then was) said, in the context of considering the “good fame and character” of a medical practitioner that:
In considering an alleged lack of good character it will be relevant for the Tribunal to seek to catalogue the pertinent wrong proved, either as an isolated incident or episode or as an indication of some deeper underlying quality which shows a…fault of character… It will often be relevant in this connection to consider the motivation of the practitioner… Where that motivation is greed or some corrupt purpose, such a finding will typically carry more weight than a conclusion that some other motivation, normally irrelevant to professional practice, affected the particular conduct impugned…
Having regard to the authorities cited above, when assessing whether a person is of good character for the purposes of s 920A(1)(d) of the Corporations Act, such assessment ought to be conducted in the context of Chapter 7 of the Corporations Act, which has the stated aim of promoting “fairness, honesty and professionalism by those who provide financial services”: s 760A of the Corporations Act. The question in this matter is whether Mr Parker is of good character in his capacity as a provider of financial services.
In considering a person's good fame, in Clearihan v Registrar of Motor Vehicle Dealers (ACT) (1994) 122 ACTR 25 Miles CJ of the Supreme Court of the ACT observed (at 29) that:
Fame involves being known, favourably, by a large section of the public, whilst character is directed to a more objective evaluation which might conflict with what the general public thinks. In a case involving a legal practitioner, R v Davis (1947) 75 CLR 409 at 420, Dixon J referred to the two concepts as 'the reputation and the more enduring moral qualities.
In Melbourne v The Queen (1999) 198 CLR 1 the High Court noted at [33] that:
In its strict sense, character refers to the inherent moral qualities of a person or what the New Zealand Law Commission has called "disposition" – which is something more intrinsic to the individual in question. It is to be contrasted with reputation, which refers to the public estimation or repute of a person, irrespective of the inherent moral qualities of that person.
The Tribunal finds, as contended by ASIC, that the premeditated, repeated dishonest conduct engaged in by Mr Parker (as set out above), demonstrates that he is a person who is not of “good fame or character” (having regard to the authorities cited above), such that the power to ban Mr Parker from providing financial services under s 920A(1)(d) of the Corporations Act is enlivened.
Section 920A(1)(e) – Whether Mr Parker has not complied with a financial services law
Section 1041H(1) of the Corporations Act (as in force at the relevant time) provided:
(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.
Section 12DA(1) of the ASIC Act (as in force at the relevant time) provided:
(1)A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive.
In respect of each of the third party loan transactions brokered by Mr Parker, the Tribunal finds, as contended by ASIC, that Mr Parker committed multiple contraventions of s 1041H of the Corporations Act or, alternatively, of s 12DA of the ASIC Act, in that Mr Parker engaged in conduct in relation to a financial product or a financial service which was misleading or deceptive or likely to mislead or deceive.
More specifically:
·Mr Parker made false or misleading representations concerning financial services and, or, financial products to each of the Clients to the effect that:
i.he could broker a loan in the Client’s name despite knowing that Esanda would reject the Client’s loan application;
ii.the Third Party would be acting as a guarantor to support the Client’s loan application;
iii.the Client was required to sign the relevant loan application and supporting documents, and provide personal and financial information, because they would be the applicant for the loan, in circumstances where Mr Parker had no intention to make a loan application in the name of the Client and the documents signed by the Client were neither submitted to Esanda nor retained on the Get Approved client file; and
iv.the Third Party was required to sign the relevant loan application and supporting documents, and provide personal and financial information, in order to become a guarantor of the Client’s loan in circumstances where Mr Parker at all times intended to make a loan application in the name of the Third Party as the primary borrower;
·the settlement documents submitted to Esanda by Mr Parker, or Mr Carroll on Mr Parker’s behalf, in respect of each of the third party loan transactions brokered by Mr Parker were misleading or deceptive or likely to mislead or deceiver in that they:
i.falsely identified the Third Party as the primary borrower;
ii.falsely identified the Third Party as being the purchaser of the relevant vehicle;
iii.included a loan contract and other supporting documents signed by the Third Party under false pretences;
iv.included invoices which were false in a material particular, namely the identity of the purchaser of the relevant vehicle; and
v.in a number of cases, included documents which had been fraudulently altered or manipulated between their receipt by Mr Parker and their submission to Esanda.
Further, or alternatively, the Tribunal finds, as contended by ASIC, that on each occasion Mr Parker issued and financed the cost of financial products (in particular insurance policies and warranties), without the knowledge or consent of his clients in respect of loans which he brokered, Mr Parker contravened s 1041H of the Corporations Act.
In brokering 30 to 40 third party loan transactions and issuing unsolicited insurance products in respect of approximately half of all of the loans he brokered during the course of his employment with Get Approved, Mr Parker engaged in a premeditated and repeated course of dishonest, misleading and deceptive conduct calculated to:
· induce Third Parties to sign loan application documents under the false pretence that they would be acting as a guarantor for the Client;
· induce Esanda to approve and settle loans, which would not otherwise have been approved, under the false pretence that the Third Party was the borrower and the purchaser of the vehicle against which the loan was secured; and
· obtain commissions for Get Approved in relation to the issue of unsolicited insurance products at the expense of his unsuspecting client base.
For the above reasons, the Tribunal is satisfied that the power to ban Mr Parker from providing financial services under s 920A(1)(e) of the Corporations Act is enlivened.
Section 920A(1)(g) – Whether Mr Parker has been involved in the contravention of a financial services law by another person
Further, in respect of each of the third party loan transactions brokered by Mr Parker, which Mr Carroll submitted to Esanda on Mr Parker’s behalf, the Tribunal finds, as contended by ASIC, that Mr Parker was involved in multiple contraventions of s 1041H of the Corporations Act or, alternatively, s 12DA of the ASIC Act, by Mr Carroll in that:
· the settlement documents submitted to Esanda by Mr Carroll contained false, misleading or deceptive information; and
· by reason of Mr Parker’s dealings with the Clients, the Third Parties and Mr Carroll, he:
i.aided or abetted any contravention of s 1041H of the Corporations Act or, alternatively, s 12DA of the ASIC Act, committed by Carroll; and, or,
ii.was directly or indirectly, knowingly concerned in or party to any contravention of s 1041H of the Corporations Act or, alternatively, s 12DA of the ASIC Act, committed by Mr Carroll.
For the above reasons, the Tribunal is satisfied that the power to ban Mr Parker from providing financial services under s 920A(1)(g) of the Corporations Act is enlivened.
Section 920A(1)(f) – Whether there is reason to believe that Mr Parker is likely to contravene a financial services law
Section 920A(1)(h) – Whether there is reason to believe that Mr Parker is likely to become involved in the contravention of a financial services law by another person
Having regard to the matters set out above, the Tribunal is satisfied that:
· Mr Parker has previously not complied financial services laws;
· Mr Parker intentionally misled his Clients, Third Parties and Esanda;
· Mr Parker falsified documents;
· Mr Parker conducted himself dishonestly;
· Mr Parker’s dishonest conduct was repeated, premeditated and occurred in order to deceive his Clients, Third Parties and Esanda;
· Mr Parker’s dishonest conduct took place whilst he was employed by the holder of an AFSL;
· Mr Parker does not possess the honesty and integrity necessary to discharge the duties and obligations imposed by financial services laws;
· Mr Parker cannot be relied upon to honestly discharge the duties and obligations imposed by financial services laws; and
· Mr Parker cannot be relied upon to comply with the financial services laws which regulate the provision of financial services and products to the general public.
Consequently, the Tribunal finds that there is reason to believe that Mr Parker is likely to:
(i)contravene a financial services law; or
(ii)become involved in the contravention of a financial services law by another person,
such that the power to ban Mr Parker from providing financial services under s 920A(1)(f) and s 920A(1)(h) of the Corporations Act is enlivened.
Length of the banning orders
In exercising the discretion to ban and in determining the length of the banning period, the Tribunal must give consideration to the purpose of the power to make a banning order. In ASC v Kippe (1996) 20 ACSR 679 the Full Federal Court observed (at 687):
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 preventative 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.
Similarly, in Felden v ASIC (2003) AATA 301 the Tribunal said (at [399]):
Accordingly, the primary consideration to which the Tribunal must have regard in determining whether to impose a banning order and, if so, its duration, is the need to maintain the confidence of investors and to encourage participation in the securities industry by demonstrating that representatives who do not perform their duties efficiently, honestly and fairly can expect to be excluded from the industry for some period.
In Musumeci v ASIC [2009] AATA 524 the Tribunal also made it clear that a banning order serves a protective purpose:
65.A fundamental and often repeated concept is that the banning power is a protective power. Its principal purpose is to contribute to the public interest by limiting the conduct of financial services business to people with the requisite capacity and integrity to provide the services in a lawful and competent manner: Santow J's propositions (i) to (iv) reflect this stated purpose and are supported by numerous cited authorities: see Australian Securities and Investments Commission v Adler (2002) 42 ACSR 80 page 97 at [56].
66.A corollary of this often repeated concept is the proposition that the exercise of the banning power is not concerned with punishment and may be regarded as entirely protective: Re Howarth and Australian Securities and Investments Commission (2008) 101 ALD 602; [2008] AATA 278 especially at [170], [176] and [180].
In relation to the Credit Activity Decision, s 81(2) of the Credit Act provides that a banning order may prohibit the person against whom it is made from engaging in a credit activity permanently or for a specified period.
Table 2 to “ASIC Regulatory Guide 218 - Licensing: Administrative action against persons engaging in credit activities”, dated November 2010 (ASIC Regulatory Guide 218), sets out factors and examples of conduct relating to specific periods of banning in respect of credit related activities. Table 2 of ASIC Regulatory Guide 218 provides:
Table 2: Factors and examples of conduct relating to specific periods of banning
| Outcome | Factors | Examples of conduct (indicative only) |
| Banning for 10+ | Dishonesty and intent to defraud | Misappropriation of client funds or otherwise engaging in fraud or theft |
| years and permanent banning | Continued, knowing and wilful contraventions of the law and disregard of legal obligations | Falsification, concealment or deliberate destruction of records required to be kept |
| Causing a large financial loss or making a large financial gain | Engaging in a pattern of persistent contraventions that indicates systemic failure or a general lack of understanding of and regard for compliance | |
| Previous contraventions of the law | ||
| Serious incompetence and irresponsibility | ||
| A likelihood that the person will engage in similar contravening conduct in the future | ||
| Significant adverse impact on consumer confidence |
In relation to the Financial Services Decision, s 920B(2) of the Corporations Act provides that a banning order may prohibit the person against whom it is made from providing financial services permanently or for a specified period.
Table 2 to “ASIC Regulatory Guide 98 - Licensing: Administrative action against financial service providers”, dated July 2013 (ASIC Regulatory Guide 98), sets out factors and examples of conduct relating to specific periods of banning in respect of the provision of financial services.
| Outcome | Factors | Examples of conduct (indicative only) |
| Banning for 10+ | Dishonesty and intent to defraud | Misappropriation of client funds or otherwise engaging in fraud or theft |
| years and permanent banning | Continued, knowing and wilful contraventions of the law, including market integrity rules and disregard of legal obligations | Falsification, concealment or deliberate destruction of records required to be kept |
| Previous contraventions of the law | Engaging in a pattern of persistent contraventions that indicates systemic failure or a general lack of understanding of and regard for compliance | |
| Serious incompetence and irresponsibility | More substantial insider trading | |
| A likelihood that the person will engage in contravening conduct in the future | More substantial market manipulation or other significant misconduct in relation to a financial product traded on a financial market (e.g. s1041A-1041E) | |
| Significant adverse impact on consumer confidence in or the integrity of a financial market | Failure to apply client’s funds in accordance with the client’s instructions | |
| Conduct significantly inconsistent with the orderly operation of a financial market | Forging a client’s signature | |
| Any dishonest conduct involving clients | Providing clients with false insurance documents |
In his “Statement of Facts, Issues and Contentions”, undated, Mr Parker states:
…
The banning orders ending Mr Parker’s engagement in both credit activities and any financial services has deeply impacted him as he holds a bachelor of economics degree. The permanent ban from these industries has limited his career and earning capacity significantly causing him to have developed severe depression.
Given his young age and the difficulty this brings in now being able to build a stable career and life, this ban should be reconsidered.
In a document titled “Personal Apology From Grant Aaron Parker”[3], Mr Parker states:
l graduated with a Bachelor of Economics degree from UWA in 2007. I was offered a few graduate economic analyst positions for both Government and private enterprises but most required me to move to the Eastern States and I wanted to stay in Perth. I had a few jobs ranging from a junior business analyst for Hillstek Holdings to managing a sports recreation centre.
During the year of 2009 I was very much trying to find an opportunity as most of the opportunities I had after graduating had dried up due to the Global Financial Crisis. I was very eager to get going in a career and prove to myself I had what it takes.
Get Approved Finance offered a role through Seek for 'trainee brokers'. Ideal candidates were Bachelor qualified ideally in economics, commerce or finance. You would be fully trained to be a finance broker. At the age of 24, new to the finance industry I was naive and impressionable.
The banning orders from engaging in any credit activities and any financial services have deeply impacted my life. As someone who has a Bachelor of Economics degree, being banned from these industries has limited my future career prospects significantly and diminished any hope of resurrecting myself.
In retrospect I can see that my actions were wrong and I regret them. I am sincerely sorry for being involved in the practices of Get Approved Finance. Unfortunately I can't turn back time and undo the things that have happened. I do though sincerely state that I would never fall into such circumstances again. You can be sure I will never make the same mistakes again.
[3] Attachment to Exhibit 3.
In his oral evidence at the hearing, in summary, Mr Parker said:
· he is deeply sorry and remorseful for his conduct, he regretted his conduct every day and he would never do it again;
· at the relevant time he was only 24 years old and was “naïve and stupid”;
· at the relevant time he went along with what everyone else at Get Approved was doing, was “easily led” and “lacked judgement”;
· Get Approved trained their employees to act in that way that he did and that, at the relevant time, he was “brainwashed” into to going along with what everyone else at Get Approved was doing;
· he did what he was told by his employer because wanted to keep his job and that, with the benefit of hindsight, he now realises that he “should have just got out of there”; and
· he blamed himself for “being an idiot” and would “love the opportunity to redeem himself”.
In summary, ASIC contends the following:
· the guidelines contained in Table 2 of ASIC Regulatory Guide 218 indicate that Mr Parker’s conduct would attract of banning in respect of his engaging in credit activities (as an employee of Get Approved) in the range of 10 years to permanent;
· the guidelines contained in Table 2 of ASIC Regulatory Guide 98 indicate that Mr Parker’s conduct would attract of banning in respect his provision of financial services (as an employee of Get Approved) in the range of 10 years to permanent;
· a permanent banning order is warranted in this matter in respect of both the provision of financial services and engaging in credit related activities in order to protect the public from Mr Parker;
· a permanent banning order also serves the additional purpose of sending a message of general deterrence to participants in the credit and financial services industries: Re HIH Insurance Ltd and HIH casualty and General Insurance Ltd, Australian Securities Investments Commission v Adler (2002) 42 ACSR 80; [2002] NSWSC 483 at [56] per Santow J; and
· a permanent banning order gives the public confidence that there are consequences for a person who fails to act honestly and with judgment, diligence and integrity. It is important that others in the credit and financial services industries know that action may be taken against them if they do not act honestly.
According to ASIC, the correct and preferable decision is that Mr Parker should be “permanently” banned from engaging in credit activities and from providing financial services in reliance on the following additional matters:
· Mr Parker’s contraventions of the Credit Act, Corporations Act and ASIC Act were objectively serious;
· Mr Parker’s conduct was dishonest according to the standards of ordinary people;
· Mr Parker’s conduct was premeditated and extended over a period, it was not isolated;
· Mr Parker’s conduct was contrary to the public interest in the ability of consumers and other participants in the credit and financial services industries to rely on the honesty and integrity of persons who engage in credit activities and provide financial services; and
· public confidence in the credit and financial services industries would be detrimentally affected if a person who engaged in such serious misconduct was not permanently banned from those industries.
Whilst the Tribunal acknowledges that Mr Parker was young at the time of the relevant conduct (being only 24 years old) and is somewhat sympathetic to the situation Mr Parker currently finds himself in, based on the evidence before it, the Tribunal agrees with ASIC’s contentions (as set out above) and finds that a permanent banning order is appropriate in Mr Parker’s case in relation to both engaging in credit activities and providing financial services.
Section 83 of the Credit Act and s 920D of the Corporations Act provide that ASIC may vary or cancel a banning order imposed under those Acts “if it is appropriate to do so because of a change in any of the circumstances on which ASIC made the order” on its own initiative or upon application (in the approved) by the person against whom the order was made. The Tribunal notes that Mr Parker has the option of making such an application to ASIC in the future.
DECISION
For the above reasons, the Tribunal affirms the Credit Activities Decision and the Financial Services Decision.
I certify that the preceding 192 (one hundred and ninety–two) paragraphs are a true copy of the reasons for the decision herein of Senior Member CR Walsh ...............[Sgd].........................................................
Administrative Assistant
Dated 1 December 2016
Date of hearing 3 November 2016 Applicant In person (Self-represented) Counsel for the Respondent Mr M J Sims
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