IN SUMMARY:
A recent Full Federal Court judgment is another pertinent reminder of the repercussions from issuing financial products and providing financial advice without holding an AFSL (Australian Financial Services License).
THE BACKGROUND:
In 2024, the Federal Court found that BPS Financial engaged in unlicensed conduct by issuing and providing financial advice about an investment product without holding an AFSL. It was also found that BPS had engaged in misleading and deceptive conduct by making several false and misleading claims about this investment.
In 2025, the full Federal Court found that BPS engaged in unlicensed conduct for a further 10 months, because it could not rely on the “authorised representative” exemption under the Corporations Act when issuing the product.
BPS has been ordered to pay penalties of $14 million – $2 million for unlicensed conduct and $12 million for misleading and deceptive conduct.
COMMENT:
The ‘financial product’ involved was a crypto product – the “Qoin Wallet”. The decision is important for what it says about the dire consequences of promoting a financial product without holding an AFSL.
In her 2024 decision, Justice Kylie Downes said: BPS had “engaged in serious and unlawful misconduct (and that) the $2 million penalty for the unlicensed conduct achieves the primary purpose of deterrence, both to BPS and industry.”
Commenting on the decision, ASIC Chair Joe Longo said the outcome sent a strong message. “The size of these penalties underscores the seriousness of BPS’s misconduct and is intended to send a strong message of deterrence.
“Given the nature of these [financial] products, providers must have the appropriate licenses and authorisations, and investors must be able to make decisions based on clear and correct statements, especially as (they) can be highly volatile, inherently risky and complex.
“ASIC will not hesitate to act where investors are potentially exposed to unlicensed financial advice, misleading and deceptive conduct, and risky products.”
As we have previously explained, the decision – which is in a similar vein to the criminal conviction of John Bigatton – reinforces the fact that virtually anyone raising money in Australia needs an AFSL.
However, no one should be fooled into thinking the regulator is solely concerned with more speculative investments. Virtually all investments are ‘financial products’ and require an AFSL.
