Centurion Case: can ASIC publish AFSL cancellation?
A recent decision of the Administrative Appeals Tribunal (AAT) looked at whether ASIC could be prohibited from publishing the cancellation of an AFSL belonging to Centurion Custodian Funds Management. As lawyer Sarah Sherman explains, the Tribunal’s rationale in deciding whether to prohibit ASIC from sharing the news may be relevant where a licensee or other organisation wants ASIC to hold off on publicising certain information.
Background
Centurion held an AFSL authorising it to provide specified financial services, including financial product advice and dealing with interests in managed investment schemes for wholesale clients.
On 18 January 2023, ASIC made a reviewable decision to cancel Centurion’s AFSL on the basis it had not used the licence and there was no evidence suggesting it would.
Centurion subsequently requested a review of the decision by the AAT. As at 23 May 2023, the review application is yet to be decided.
In the interim, Centurion sought orders preventing ASIC from publicising news of the cancellation decision pending the outcome of the review. Centurion argued it would suffer reputational damage from such an announcement. Notably, Centurion did not request a stay of the review application itself (the relevance of this is set out below).
Relevant law
Section 915F(2) of the Corporations Act says ASIC is obliged to publish notice of its decision in the gazette “as soon as practicable after notice has been given to the licensee”.
ASIC says it is under a ‘statutory duty’ to publicise the cancellation decision in this case in accordance with s 915F(2).
Centurion’s argument
The crux of Centurion’s argument was that given it was not trading, there was no risk of harm to any consumers in ASIC staying publication of the cancellation decision.
It argued publication would compound certain procedural fairness issues that they have raised in their submissions in relation to the review. Publication might also have collateral effects on the business of the wider group of companies.
Questions for the AAT
Noting the statutory duty conferred on ASIC, the AAT said ASIC did not have the power to voluntarily refrain from publication. On that basis alone, Centurion’s application would have been unsuccessful.
However, the AAT noted that the power to stay a particular decision under s 41(2) of the AAT Act can extend to restraining publication or other administrative acts that ordinarily follow a cancellation decision, even where the cancellation decision itself is not being stayed.
So, although Centurion didn’t request it, the AAT went on to consider whether it was appropriate to order a stay of the review application under section 41(2) of the AAT Act, and if so, whether that would extent to preventing publication.
Decision
The AAT said because the reason for the cancellation was that the licence was effectively dormant, disclosure in the gazette would be limited in nature and would not suggest Centurion had done anything wrong.
Therefore, it was difficult to see how reputational damage might be done as a notice to that effect should not be sufficient to “spook” any party.
The AAT also noted the gazette could be corrected in due course should the AAT reach a different view as to the AFSL cancellation.
The AAT said that whether an entity holds an AFSL or not is reputational information that might be of value to the entity or other group companies. There was a real danger that suppressing news of administrative action, such as the cancellation of an AFSL, might lead participants in a range of markets to make assumptions about that entity. Therefore, it would be against the public interest to grant a stay.
Ultimately, the circumstances did not weigh in favour of granting a stay of the review decision. Therefore, there were no grounds to prevent ASIC from publicising the news of the cancellation of Centurion’s AFSL.
Next steps?
The Tribunal’s rationale in deciding whether to prohibit ASIC from sharing news of the AFSL cancellation may be relevant where a licensee or other organisation wants ASIC to hold off on publicising certain information.
In particular, the AAT will place emphasis on whether there are any statutory duties governing the publication of information by ASIC, and if not, whether it is against the public interest to withhold certain information.
Reach out to our team to learn more about this decision.
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