S & A Chalhoub Nominees Pty Ltd and Australian Securities and Investments Commission

The Administrative Appeals Tribunal considered an appeal by S & A Chalhoub Nominees Pty Ltd against a decision by the Australian Securities and Investments Commission (ASIC) to refuse its application for an Australian Financial Services Licence (AFSL). The applicant, controlled by Mr Akram El-Fahkri, sought to establish a financial advisory business specialising in superannuation, requiring an AFSL to provide financial product advice and class of product advice to retail clients. ASIC had initially indicated a preliminary decision to grant the licence subject to the applicant meeting specified requirements, including confirmation of licence conditions, professional indemnity insurance, membership with an external dispute resolution scheme, and evidence of training for its proposed responsible manager, Mr El-Fahkri Snr.

The Tribunal was required to determine whether the applicant would contravene its obligations under section 912A of the *Corporations Act 2001* (Cth) if granted an AFSL. Specifically, the Tribunal considered whether the applicant had demonstrated adequate compensation arrangements under section 912B, whether its proposed responsible manager met the training and knowledge requirements under Regulatory Guides 105 and 146, and whether the applicant's conduct indicated it would not provide financial services efficiently, honestly, and fairly under section 912A(1)(a).

In its reasoning, the Tribunal found that the professional indemnity (PI) insurance policy proposed by the applicant was inadequate. This was because the policy contained an exclusion for "any investment advice or opinion," which directly conflicted with the applicant's stated intention to provide financial product advice. Furthermore, the business description used for the PI policy quote was narrower than that provided for the AFSL application, potentially rendering the cover insufficient. The Tribunal was satisfied that these compensation arrangements did not meet the requirements of section 912B and Regulatory Guide 126.

Consequently, the Tribunal affirmed ASIC's decision to refuse the AFSL.