Inquiry on $1bn lawyer loans: [2 Edition]
Stapleton, John. The Australian [Canberra, A.C.T] 26 Feb 2001: 6.
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Abstract
The Australian Securities and Investments Commission yesterday announced an investigation into the financial status of more than 100 solicitors' mortgage investment schemes after a rush of complaints about loans being defaulted.
ASIC chairman David Knott said the initial focus would be on "runout schemes" that did not make the transition to a tougher regulatory regime in 1999.
ASIC yesterday released a list of the runout mortgage schemes and a consumer information sheet, both available on its investor website.
YOU might think that going to your solicitor and investing in a solicitor-run mortgage scheme was a safe way to invest your money.
But thousands of mostly elderly investors are finding out that may not be the case.
The Australian Securities and Investments Commission yesterday announced an investigation into the financial status of more than 100 solicitors' mortgage investment schemes after a rush of complaints about loans being defaulted.
The Australian Securities and Investments Commission yesterday announced an investigation into the financial status of more than 100 solicitors' mortgage investment schemes after a rush of complaints about loans being defaulted.
The investigation is the largest the commission has conducted.
The schemes have investments of more than $1billion. Loans of more than $300million are in default.
For many years, solicitors and finance brokers have run investment schemes where groups of investors lent money to borrowers who mortgaged land as security.
In December 1999, new standards were set up to protect investors. By law, any scheme unable to meet the new standards must stop attracting investors and wind up its operations by October 31.
ASIC chairman David Knott said the initial focus would be on "runout schemes" that did not make the transition to a tougher regulatory regime in 1999.
"Since last year we have been building up a picture about the financial status of these schemes," he said. "It is clear that a number of them have serious default rates. We expect those defaults to become worse as the wind-up deadline in October approaches."
The commission yesterday announced that leading insolvency expert Tony Hodgson would head the inquiry.
"Our first priority is to obtain a better national database on the health status of these funds and to target our investigations to those schemes where investors face the greatest risk," Mr Knott said.
"It is not realistic to expect that investor losses will be recovered, but our intervention should provide opportunity to minimise these losses and maximise consumer redress."
ASIC yesterday released a list of the runout mortgage schemes and a consumer information sheet, both available on its investor website.
MORE TO THE STORY
www.fido.asic.gov.au.
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