Earlier this year, in Australian Securities and Investments Commission, in the matter of NSG Services Pty Ltd v NSG Services Pty Ltd [2017] FCA 345, Moshinsky J of the Federal Court of Australia had found that a financial services licensee was liable for breaches of ss 961K(2) and 961L of the Corporations Act 2001 (Cth). The breaches had been admitted by the licensee and the Court had made declarations substantially in terms which had been agreed between the parties. However, there had been no agreement between the parties on the penalty so orders had been made by consent with a view to a hearing taking place at a later time on the penalty. (For a summary of the case, see K Ottesen, “Financial services licensee found liable for breach of the FOFA reforms”, 4 May 2017.)
Following that decision, the parties reached an agreed position on proposed pecuniary penalties and costs. Recently, in Australian Securities and Investments Commission, in the matter of Golden Financial Group Pty Ltd (formerly NSG Services Pty Ltd) v Golden Financial Group Pty Ltd (No 2) [2017] FCA 1267, Moshinsky J considered that the amount of the penalty proposed by the parties, which was $1 million for both the contraventions of ss 961K(2) and 961L, was appropriate because the contraventions were very serious and warranted the imposition of a substantial penalty. His Honour also considered that separate pecuniary penalties should be imposed for the s 961K(2) contraventions and the s 961L contraventions because s 961K(2) automatically imposed liability upon the licensee for the contraventions by its representatives (other than authorised representatives) of s 961B (‘best interests’ duty) and of s 961G (‘appropriate advice’ duty) while s 961L imposed an obligation on the licensee itself to take reasonable steps to ensure that its representatives complied with those provisions. In the result, his Honour ordered the licensee to pay:
- a pecuniary penalty to the Commonwealth in the amount of $250,000 in respect of the contraventions of s 961K(2); and
- a pecuniary penalty to the Commonwealth in the amount of $750,000 in respect of the contraventions of s 961L.
