ASIC has accepted a voluntary variation of the Australian financial services (AFS) licence of AP Lloyds Pty Ltd, excluding the firm and its corporate authorised representative, Advisory Partner Connect Pty Ltd, from providing advice as an independent expert.
The variation means that AP Lloyds and Advisory Partner Connect cannot prepare or provide independent expert reports and related opinions or valuations in connection with corporate transactions, including takeover bids, corporate schemes of arrangement, related party transactions and corporate restructures.
AP Lloyds and Advisory Partner Connect are still permitted to provide other services, including financial, valuation and accounting services, other than as an independent expert, as permitted by the varied AFS licence.
The variation follows ASIC's concerns that various independent expert reports prepared by Advisory Partner Connect, did not comply with:
- policy guidance in Regulatory Guide 111 Content of expert reports, including the suitable selection, application, and accurate disclosure of:
- valuation approach, methodology and inputs, and
- transaction opinion, or
- policy guidance in Regulatory Guide 112 Independence of experts, in respect to the engagement of technical specialists and review of their reports.
Given the deficiencies identified within the reports, ASIC held concerns with AP Lloyds' competence to provide independent expert advice and the adequacy of its supervisory arrangements of its authorised representative, as part of its general obligations as an AFS licensee.
AP Lloyds and Advisory Partner Connect do not admit a contravention of the law. The variation is effective 28 August 2024 and replaces an interim undertaking by Advisory Partner Connect to cease independent expert engagements.
Background
Independent experts as financial system gatekeepers
In November 2023, ASIC highlighted that conduct of gatekeepers, such as AFS licensees, is an enforcement priority for ASIC in 2024.
AFS licensees that provide independent expert reports have responsibilities as gatekeepers in corporate transactions, with their reports relied upon by investors in making economic decisions.
ASIC's expectations regarding independent expert reports are set out in Regulatory Guide 111 Content of expert reports and Regulatory Guide 112 Independence of experts. ASIC regularly reviews reports prepared by licensees to ensure compliance with our regulatory guidance and where necessary, takes licensing and enforcement action.
