ASIC has cancelled the Australian credit licences of Ultimate Credit Management Pty Ltd (in liquidation) (Ultimate Credit) and Worry Free Finance Pty Ltd (Worry Free) following payments of compensation by the Compensation Scheme of Last Resort (CSLR).
On 6 February 2024, the Australian Financial Complaints Authority (AFCA) made a determination against Ultimate Credit, which Ultimate Credit failed to pay. Subsequently, on 14 August 2024, the CSLR paid $500 to a person for the 's AFCA determination and notified ASIC. As a result, ASIC cancelled Ultimate Credit's licence on 10 September 2024.
On 13 February 2022, AFCA made a determination against Worry Free, which Worry Free failed to pay. The CSLR paid $22,001 to a person for the AFCA determination on 29 August 2024 and notified ASIC. ASIC then cancelled Worry Free's licence on 12 September 2024.
Where the CSLR pays compensation to an eligible consumer in relation to an AFCA determination and notifies ASIC of the details of the firm that failed to pay the compensation, ASIC must cancel the Australian financial services licence or Australian credit licence of the firm.
The cancellation is not subject to discretion or merits review.
Background
The CSLR was established in June 2023, commencing operations in April 2024. It can pay up to $150,000 in compensation to consumers who have an unpaid determination from AFCA relating to authorised personal financial advice, credit intermediation, securities dealing or credit provision, and where other eligibility criteria are met.
The AFCA complaint process must first be completed before a claim can be lodged with the CSLR. All reasonable steps to obtain compensation from the financial firm must be taken before a CSLR payment can be made.
ASIC's decisions to cancel the credit licences of Ultimate Credit Management and Worry Free Finance marks the first time ASIC cancelled credit licenses following the CSLR paying compensation. These decisions follow another ASIC first - ASIC's first cancellation of an Australian financial services (AFS) licence following a CSLR payment, when on 19 August 2024, ASIC cancelled the AFS licence of Libertas Financial Planning Pty Ltd (in liquidation) (24-181MR).
This decision is not ASIC's first regulatory action in relation to Ultimate Credit. On 18 October 2021, ASIC commenced civil penalty proceedings against Ultimate Credit for commencing proceedings against borrower in states in which the borrowers did not live, in contravention of it obligation to do all things necessary to ensure that it engaged in credit activities efficiently, honestly and fairly (21-275MR).
More information
- The AFCA website contains more information about the AFCA complaint process.
- CSLR website contains more information about the CSLR claims process.
