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., following ongoing compliance failures in its FX derivatives business.

ASIC’s action comes after raising concerns that Cambridge:

• misclassified more than 2,800 retail clients dealing in structured FX derivatives as wholesale clients and failed to maintain adequate systems, record keeping and monitoring procedures for classification of retail and wholesale clients
• did not promptly remediate affected clients, with amounts expected to total millions of dollars
• failed to maintain adequate arrangements to manage conflicts of interest, including relating to Cambridge representatives’ remuneration arrangements
• failed to maintain adequate risk management systems and adequate human resources to carry out supervision, compliance and risk management functions, and
• breached its financial resource requirements.

Australian small business owners managing their FX exposures in volatile times expect AFS licensees to treat them fairly and to afford them important statutory consumer protections they are owed.

The additional licence conditions will require Cambridge to:

• prepare a comprehensive remediation plan to address the compliance failures in its FX derivatives business and remediate misclassified retail clients
• appoint an independent expert to report on the adequacy of Cambridge’s remediation plan, including its remediation for misclassified clients, and
• have the independent expert assess the operational effectiveness of Cambridge’s remediation activities to prevent similar issues in the future.

AFS licensees must not profit from their compliance failures and consumer remediations should be initiated and conducted promptly.

Cambridge has cooperated with ASIC throughout this process and has consented to the imposition of the additional licence conditions.