ASIC imposes strict sanctions on BPS Financial for violations of the Financial Services and Financial Companies Act

The Australian Federal Court has imposed a fine of AUD 14 million on the financial company BPS Financial for gross regulatory violations. This decision underscores the importance of complying with the Financial Services and Financial Companies Act in Australia and demonstrates the consequences of inadequate oversight of financial operations.

Scale of Regulatory Violations

The Australian Securities and Investments Commission (ASIC) filed a lawsuit against the company for the period from 2020 to 2023, during which BPS Financial unlawfully engaged in the distribution and management of the Qoin Wallet product. During this time, the company provided financial services and advice without the proper Australian license, directly contravening current financial services legislation.

The penalty distribution reflects the severity of each violation: AUD 1.3 million was assigned for providing licensed services without permission, and AUD 8 million for disseminating misleading and false informational materials that deceived potential clients.

Systemic Issues and Management Responsibility

Court analysis revealed critical deficiencies in the company’s internal control systems and compliance measures. The court found that BPS Financial’s management failed to ensure adequate mechanisms to prevent violations of the Financial Services and Financial Companies Act. Such behavior was classified as “serious and unlawful,” indicating deliberate or grossly negligent disregard for regulatory obligations.

The involvement of senior managers in the violations is particularly significant, as it demonstrates that the problems stemmed not from individual employees but from systemic corporate governance failures.

Long-term Consequences and Oversight Measures

In addition to financial sanctions, the court imposed restrictions on BPS Financial’s future activities. The company is prohibited from providing financial services without a license for the next ten years—a period that effectively excludes them from certain aspects of financial activity until 2033.

Furthermore, BPS Financial is required to publish court notices of the decision on the platform and the Qoin Wallet website, ensuring transparency for potential users. The company must also cover the majority of ASIC’s legal costs, adding further financial obligations.

Significance for the Industry

This case serves as a compelling reminder of the importance of strict compliance with the Financial Services and Financial Companies Act. Australian regulators, especially ASIC, actively enforce these standards by bringing companies attempting to conduct financial activities without proper licenses to court. For other financial companies, this decision signals the need to improve management systems and compliance, and to invest in staff training to ensure full regulatory adherence.