ASIC has defended its handling of concerns raised ahead of the Sterling First collapse, while confirming the company’s conduct could warrant criminal charges.
The corporate watchdog has defended its handling of concerns raised ahead of the Sterling First collapse, while telling a parliamentary inquiry aspects of the company’s conduct could warrant criminal charges.
Today marked the beginning of a Senate Economics Committee inquiry into the collapse of the South Perth-based rent-for-life property investment company, which went into administration in May 2019.
The collapse, first revealed by Business News, affected more than 100 investors, many of whom were pensioners.
Appearing before the inquiry in Canberra this morning, ASIC chair Joseph Longo acknowledged the devastating financial, social and emotional impact that the collapses had had on former clients, and their wish for the watchdog to have intervened earlier.
Despite receiving several tips regarding the conduct of the group, ASIC did not become involved in the matter until March 2017, when the state’s Department of Mines raised concerns about the scheme and representations being made to potential investors.
It waited until August 2017 to serve stop orders on responsible entity Theta Asset Management before deciding in March 2018 not to take further action.
It launched a formal investigation two months later, one year before the company, which had operations in Western Australia, Victoria and Queensland and managed about 3,500 properties, was placed in administration.
But Mr Longo defended the process, telling the inquiry that ASIC took regulatory action when it first became aware of the concerns and that any action was bound by due process and finite resources.
He said he was satisfied that the actions it took were appropriate based on the information it had at the time.
“Any action we take must be based on the collection of proper evidence and we must follow due process before we can intervene, particularly in circumstances where there is incomplete or conflicting information,” he told the inquiry.
“Our role also requires us to regularly make difficult choices about which reports of misconduct to examine and which apparent breaches to investigate.
“Our finite resources, as well as those of the prosecuting authorities and courts, mean we cannot pursue all possible breaches of the law.”
Consumer Protection Commissioner Gary Newcombe used this afternoon’s hearing to back the federal government’s proposed Compensation Scheme of Last Resort for consumers and small businesses who are unable to enforce compensation determinations against financial services providers.
But he raised concerns about the proposed caps and their implications for victims of the Sterling First collapse.