ASIC acts on Banksia, Provident failures

by BN31 Oct 2012

ASIC is set to undertake a wholesale review of the way it regulates the debenture industry following the collapse of Banksia Financial Group and Provident Capital.

The Australian Financial Review reports that the regulator will overhaul its regulation of the $4.5 billion debenture market, establishing an internal task force to probe the beleaguered sector.

According to the AFR, eight of the 15 largest debenture issuers identified as the riskiest by ASIC in 2007 have since collapsed.

As reported by Australian Broker, Banksia Financial last week had receivers appointed due to solvency fears, with $660m owed to investors.

Aggregators such as AFG and Vow Financial are currently dealing with loans that their brokers had either already settled with the group, or were in the midst of applying for on behalf of their clients.

ASIC is reportedly examining requirements which requires debenture issuers to disclose if they meet a set of suggested capital ratios, with no penalty attached if they are indeed uncercapitalised.

COMMENTS

  • by Country Broker 31/10/2012 11:02:03 AM

    As usual thios is too little too late

  • by 1martym1 31/10/2012 12:11:52 PM

    These lenders have been smashed by the general slow down in development lending from the majors and the subsequent illiquid market and dropping value of the development site market. The thing I find most ironic is they have actually had access to better quality deals to lend to since the GFC (as banks tightened their policies) but with the general malaise and rates at 15% the small time developers can't make it work and cant refinace out of trouble.

  • by Faud Broker 1/11/2012 2:25:11 PM

    The accountancy firm that gave a clean bill of health 30 days before will be killed off and so they should. The insurance company will be paying out huge amount of damages to the investors who RELIED on the audit.