Investors given more protection
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Tuesday, 3 August, 1999 - 22:00
The Australian Securities and Investments Commission has moved to ensure greater consumer protection for people who have placed money in mortgage investment schemes.
The move was in response to the growth of the schemes and the discovery of serious acts of fraud in some of these schemes.
The new policy, scheduled to begin by 1 November 1999, will see ASIC taking a closer and more direct role in the regulation of this industry under the new Managed Investments Act.
Traditionally, the investment schemes were supervised by law bodies and other professional organisations, such as finance brokers’ associations.
The Association of Independent Retirees has welcomed the move because it increases consumer protection, especially for retiree investors.
The Association spokesman, Ray Trestrail said, “Some of the schemes in NSW and Queensland have grown from small mortgage investments run by small firms to very large schemes.
“The people running them just don’t have the expertise to be effective.
“As a result, some of these schemes have collapsed and many elderly people have lost almost all their retirement money without any means of recovering their loss”.
ASIC chairman Alan Cameron said ASIC recognised that some relief will be required from the law to allow schemes to operate efficiently but without compromising investor protection.
This limited relief will allow the registration of a single ‘umbrella scheme’ rather than a scheme for each mortgage and the use of a two part prospectus.
Relief from the law will also apply if consumer protection is administered and supervised by a recognised industry supervisory body and if the total amount lent by the mortgage practice is less than $5 million.
Mr Trestrail said the Association had no objection to smaller, low risk mortgage investment schemes continuing to operate under an industry based compliance structure approved by ASIC.
“The new regulations contained in this policy statement mean that people who aren’t qualified to run these schemes will not get a licence and can be prosecuted,” he said.
The move was in response to the growth of the schemes and the discovery of serious acts of fraud in some of these schemes.
The new policy, scheduled to begin by 1 November 1999, will see ASIC taking a closer and more direct role in the regulation of this industry under the new Managed Investments Act.
Traditionally, the investment schemes were supervised by law bodies and other professional organisations, such as finance brokers’ associations.
The Association of Independent Retirees has welcomed the move because it increases consumer protection, especially for retiree investors.
The Association spokesman, Ray Trestrail said, “Some of the schemes in NSW and Queensland have grown from small mortgage investments run by small firms to very large schemes.
“The people running them just don’t have the expertise to be effective.
“As a result, some of these schemes have collapsed and many elderly people have lost almost all their retirement money without any means of recovering their loss”.
ASIC chairman Alan Cameron said ASIC recognised that some relief will be required from the law to allow schemes to operate efficiently but without compromising investor protection.
This limited relief will allow the registration of a single ‘umbrella scheme’ rather than a scheme for each mortgage and the use of a two part prospectus.
Relief from the law will also apply if consumer protection is administered and supervised by a recognised industry supervisory body and if the total amount lent by the mortgage practice is less than $5 million.
Mr Trestrail said the Association had no objection to smaller, low risk mortgage investment schemes continuing to operate under an industry based compliance structure approved by ASIC.
“The new regulations contained in this policy statement mean that people who aren’t qualified to run these schemes will not get a licence and can be prosecuted,” he said.