ASIC has imposed additional conditions on the Australian financial services (AFS) licence of Societe Generale Securities Australia Pty Ltd (SGSAPL) to ensure compliance with client money regulations.
The need for additional conditions arose after SGSAPL reported to ASIC that it had deposited client money into unauthorised bank accounts between December 2014 and September 2018. Client funds must be deposited with Australian authorised deposit-taking institutions or an account prescribed by client money regulations.
To ensure compliance with the client money obligations set out in the Corporations Act 2001 and client money regulations, SGSAPL must appoint an independent expert to assess and test its controls, systems and processes to ensure compliance with the client money requirements of the Act and the Regulations. The independent expert must identify any deficiencies and set out any remedial action required in a report provided to both SGSAPL and ASIC.
The additional conditions also require SGSAPL to provide ASIC with attestations from a qualified SGSAPL senior executive and a SGSAPL board member that confirm all remedial actions recommended by the independent expert have been adopted and implemented.
If attestations are not provided, SGSAPL must:
- cease on-boarding new customers if the on-boarding involves SGSAPL receiving client money from or for the benefit of the customer; and
- refrain from charging brokerage fees in relation to any futures transactions executed by SGSAPL to the extent that the transactions involve SGSAPL receiving client money in Australia.
These restrictions remain for the period the attestation remains outstanding.
Background
In addition to keeping separate client money from money belonging to licensees, the client money provisions also protect the interests of clients of AFS licensees by:
- limiting the uses of client money;
- limiting the circumstances in which client money may be withdrawn from client money accounts; and
- imposing sanctions on licensees who fail to comply with the client money provisions.
The additional conditions have been imposed on AFS licence number 289791.
