Our Gladys is busy digging into FOS Reports - wonder what happened to those complaints and outcomes and what happened to the Directors?  We know what ASIC do - bleedin nothing and hence why ASIC is subject to 2014 Inquiry.  We should have mandatory Inquiry into ASIC every year until they start understanding corrupt behaviour is not acceptable.

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 Phoenix Activity


In the course of our dispute resolution work, we see Phoenix activity.  Where this occurs, consumers can be left with unrecoverable losses while the financial advisors responsible for the losses can continue to provide advice.  Over the past two years, we have identified four cases of Phoenix activity that affected about 125 disputes.

 There are many forms of Phoenix activity.  One example is outlined below and a case study is also provided:


 Example of Phoenix activity


  • A large number of disputes against one licensee are lodged with FOS
  • The licensee's directors incorporate a new company with a name virtually identical to the licensee''s name
  • The new company applies to ASIC for a licence
  • ASIC grants the licence
  • The new licensee grants authority to the oold licensee's authorised representatives
  • The new licensee (and its authorised representatives) continue to advise clients of the old licensee, commence "new" client/adviser relationships with those clients and receive payments such as trailing cmmissions that follow the clients
  • The old licensee goes into voluntary administration or liquidation
  • There are no assets in the administration or liquidation to pay unsecured creditors (including applicants in the disputes lodged with FOS) and the old licensee's professional indemnity insurer had denied liability
  • The new business continues to carry n a financial services business

Case study............


In disputes relating to insurances of Phoenix activity, we see that the Applicants are frustrated and angry.  They are left with losses that may not be compensated while the financial advisers considered responsible for the losses continue to operate under new licences.


We support reforms to prevent Phoenix activity.  We consider that the proposed enhancements to ASIC's powers through items 2 to 9 of Schedule 1 to the First Bill should enable ASIC to deal with various forms of Phoenix activity.


Second Bill


3.  Best interests obligations


FOS operates with Terms of Reference, which are on our website (under "About us").  The Terms of Reference require us, when deciding disputes, to do what is fair in all the circumstances, having regard to:

  • legal principles;
  • applicable industry codes or guidance as to practice
  • good industry practice; and
  • previous relevant decisions of FOS or its predecessors