Mortgage company's AFSL cancelled after financial obligations breached

by AB29 Apr 2014
The mortgage arm of a failed financial group has had its financial services licence cancelled by the Australian Securities and Investments Commission.
 
ASIC announced yesterday it has cancelled the AFSL of Banksia Mortgages, one of four subsidiaries of the Victoria-based Banksia Financial Group, which collapsed in 2012. The others include the debenture issuer Banksia Securities, Cherry Fund and BFG Management.

In August last year, the Supreme Court of Victoria ordered Banksia Mortgages to wind up its contributory mortgage scheme Banksia Mortgage Fund.
 
In December, the fund's portfolio of loans was sold to Deutsche Bank and $85 million distributed to 1,200 investors.

Banksia Mortgages self-reported a breach of its AFSL financial requirements this month, however, ASIC decided against taking AFS licensing action at that time. Instead, ASIC closely monitored Banksia Mortgages as it took steps to wind up the Banksia Mortgage Fund.
 
ASIC considered this approach the best way to maximise the return to investors in the circumstances, and accepted Banksia Mortgages’ application to cancel its AFSL to let it to transfer money to Banksia Securities, which it had been maintaining to satisfy liquidity requirements under its AFSL.

Most investors in Banksia Mortgage Fund have received 100% return of their money plus interest, but around 108 investors are yet to be paid all of their money back, ASIC said.

Receiver McGrathNicol has so far paid out 80 cents in the dollar to Banksia Securities.

ASIC is still investigating the failure of Banksia Financial Group. 

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