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BFCSA: Banksia Mortgages debacle - ASIC needs to blame itself! Another $630 million Ponzi plus

Posted by on in ASIC'S Negligence
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Its time auditors moved into ASIC! Banksia is a  gorgeous Australian native shrub.  Yet there is nothing gorgeous about this company BANKSIA using the shrub name in vain and rhymes with Grub.  Wait until the borrowers come out of the wordwork and explain: "we were just pensioners and they enticed us into 2 year loans and we did not have to pay any payments, and then Banksia gave us blocks of land in worthless swamp territory."  Well that's according to the receivers of Banksia Securities in 2012.  I was there in the audience. ASIC was a distinct NO SHOW. 

ASIC Commissioner told me face to face in Feb 2013: "Banksia Mortgages is safe - no, definitely nothing wrong with that one."  In answer to my question "what about Banksia Mortgages being a giant Ponzi?"  I explained what the receiver had said.  Commish just rolled his eyes, as one does.  Broker News also reports Banksia  loan book has been sold off to European company.  Thats nice!

Now ASIC blame the auditor.  Its about time ASIC blames itself for its own regulatory incompetence.  Audits were checked according to the commish in 2012.  The public have been mistreated with poor information from the regulator for too long and ASIC then tarnishes the industry as a whole.  Meanwhile, consumers pay the highest price for this folly.  This email address is being protected from spambots. You need JavaScript enabled to view it.

Shoddy audits contributed to mortgage firm's collapse

by Calida Smylie | 16 Jun 2014

An auditor at collapsed mortgage financing firm Banksia Financial Group has been banned from practicing for five years.

Australian Securities and Investments Commission has accepted an enforceable undertaking from Warren John Sinnott of Kennington, Victoria, that he will not practise as a registered auditor until 11 June 2019, as part of an ongoing investigation into Banksia’s collapse.

Sinnott was the lead auditor responsible for the audits of companies in the Banksia group – which included Banksia Mortgages, debenture issuer Banksia Securities, Cherry Fund and BFG Management – for the financial years 2009 to 2012.

ASIC found Sinnott failed to carry out the proper duties of an auditor. In particular, ASIC discovered he did not conduct the audits in accordance with the Australian Auditing Standards, as required under the Corporations Act.

Banksia formerly encouraged commercial, industrial and rural property loan submissions from brokers up to the value of $10 million, funding its lending portfolio through a mortgage fund for investors.

As at October 2012, Banksia had raised approximately $663 million from 15,622 investors. But on 25 October 2012, receivers were appointed to recover funds in a shock insolvency.

The lender had marketed itself as a niche funder without 'big organisation' processes, promising customers and brokers they were "dealing with a quality lender who is able to handle significant loan size and volume".

After investigating each audit, ASIC formed the view that Sinnott failed to perform sufficient audits on loan receivables, and obtain sufficient audit evidence to reduce the risk of material misstatement of loan receivables to an acceptably low level.
He did not display an appropriate level of professional scepticism when auditing loans receivable, or remain alert through the audits that the risk of the potential impairment of loan receivables may cast doubt over Banksia Group's ability to continue as a going concern, ASIC said.
Among other things, Sinnott has agreed to do 10 hours of continuing professional development on audit methodology each year during the suspension period.
“Auditors are important gatekeepers who are relied upon to provide assurance and market confidence in the quality of financial reports. Auditors who fail to adequately perform their duties will be held to account,” ASIC commissioner John Price said.
ASIC's investigation into the collapse of Banksia is continuing.
Banksia Mortgages had its financial services licence cancelled by ASIC in April.


Mortgage company's AFSL cancelled after financial obligations breached

Banksia loan portfolio sold to major European bank

 Charles Ponzi 1921 would have loved these This email address is being protected from spambots. You need JavaScript enabled to view it.


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