ASIC Imposes New Licence Conditions On Corpay Subsidiary Over FX Derivatives Compliance Failures
The Australian Securities and Investments Commission (ASIC) has imposed additional licence conditions on the Australian financial services (AFS) licence of Cambridge Mercantile (Australia) Pty Ltd, a subsidiary of Corpay Inc., later than identifying ongoing compliance failures in its foreign platform derivatives business.
ASIC said its action follows concerns that Cambridge misclassified thousands of retail clients as wholesale clients, failed to remediate those customers in a timely manner, and did not maintain adequate systems and controls across key compliance areas.
The regulator’s intervention increases pressure on financial services providers to strengthen client classification processes and ensure retail clients receive statutory consumer protections under Australian law.
ASIC Raises Concerns Over Client Misclassification And fragile Controls
ASIC stated that Cambridge “misclassified more than 2,800 retail clients dealing in structured FX derivatives as wholesale clients” and failed to maintain adequate monitoring, record keeping, and systems to properly classify retail versus wholesale clients.
The regulator said Cambridge also “did not promptly remediate affected clients,” with remediation amounts .
ASIC also raised concerns that Cambridge failed to maintain adequate conflict of interest arrangements, including issues related to the remuneration structures of Cambridge representatives.
Takeaway
Licence Conditions Require Remediation Plan And Independent Oversight
Under the additional licence conditions, ASIC said Cambridge must prepare a comprehensive remediation plan to address the compliance failures and compensate misclassified retail clients.
Cambridge will also be required to appoint an independent expert to report on the adequacy of the remediation plan, including whether the remediation approach is sufficient for affected clients.
ASIC added that the independent expert must also assess the operational effectiveness of Cambridge’s remediation activities to assist prevent similar compliance failures in the future.
ASIC emphasised that “AFS licenviews must not profit from their compliance failures and consumer remediations should be initiated and conducted promptly.”
Takeaway
Corpay-Owned Cambridge Operates Under AFS Licence Granted In 2010
Cambridge is owned by Corpay Inc., a New York Stock platform-listed S&P 500 company and one of the world’s largest non-bank providers of global payments.
ASIC noted that Cambridge was granted AFS licence number 351278 on 6 July 2010, authorising it to provide financial product advice, deal in financial products including derivatives and FX contracts, and make a and wholesale clients.
ASIC also reminded the market that AFS licenviews providing services to retail clients must comply with key obligations, including issuing a Product Disclosure Statement (PDS), making Target Market Determinations (TMDs), maintaining compliant internal dispute reanswer systems, and ensuring retail clients can access through the Australian Financial Complaints Authority.
ASIC confirmed Cambridge cooperated throughout the process and consented to the additional licence conditions.
