A SURVEY by the Australian Securities and Investments Commission has found poor compliance in the running of smaller mortgage schemes.
The ASIC survey focused on Responsible Entities, which are licensed to look after investors’ funds and manage the assets of managed investment schemes.
ASIC inspections revealed breaches or compliance failures in 69 of the 83 Responsible Entities inspected.
Subsequent remedial action included revoking dealers’ licences, imposing additional licence conditions and modifying scheme compliance plans.
ASIC’s Darren McShane said he was “particularly disappointed with the lack of compliance and other breaches by Responsible Entities of smaller mortgage schemes”. The survey found that mortgage schemes generally exhibited very poor compliance monitoring practices and a poor compliance culture. As a result, a large number of breaches were detected.
Some mortgage scheme operators failed to disclose clearly that they did not do credit checks on borrowers or were only doing limited checks. ASIC also found managers who were not obtaining independent valuations of properties and were accepting valuations with inadequate or inappropriate methodologies.
The survey was held over the 12 months to June 2001. The 83 entities surveyed represent about one fifth of the Managed Investment industry.
