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BFCSA: Banksia Securities Victims fight back. ASIC knew in 2005! $660 Million in Losses.

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BFCSA:  Banksia Retiree Victims:  ASIC say take a test!!!  We say: “Take a Hike.

Yesterday's Australian Financial Review article must go down in Australia's history as as an all time low even for ASIC: "Investors Must Pass Exam: ASIC."  

The AFR used ASIC's driveling nonsense as front page lead story.  However, the fact that ASIC CHOSE to run this story on the very day 14,000 Banksia investors were to receive bad news right before Christmas, is a demonstration how ASIC is prepared to cast blame on everybody else for ASIC's decade of neglect and show a complete INSENSITIVITY towards aggrieved consumers.  

Chairman Greg Medcraft wants to run IOSCO, the International Org of Security Chiefs.  He was prepared to give the Mums and Dads a whack over the head for not having any intelligence.

If there was any merit in the idea, he lost it in the timing of the delivery.  He also upset the Financial Planning Industry and the Banking Sector.....but we care not about them.  What THE proposed TEST means is that IF Investors have to take an EXAM of knowledge prior to investing funds in unregulated financial products, no-one would pass the test.  The idea is based upon knowledge of risk you are taking and is at odds with common sense.

ASIC knew unregulated Managed Investment Schemes were a revamped relic of the Old Pooled Mortgage Scams run by Solicitors in the Nineties whereby $1.5 Billion was lost by retirees around the nation.  Borrowers lost their homes.  Everyone was stitched up.  Everyone lost substantial sums fo money except for the Promoters who hit the jackpot.  Only one lawyer out of 127 Law Firms involved, was prosecuted by ASIC, then the regulator dropped the charges after the publicity died down.

For ASIC to PERMIT UNREGULATED and REGULATED products to co-exist in the market place, which they were responsible for, is the root of all these problems.  I had a few meetings with ASIC Commissioners  Directors and Deputy Chair, in 2005 on this very issue.  Westpoint, which I had warned ASIC Chiefs about in 2000, collapsed months after the 2005 meetings.  I attended all meetings as a volunteer and at my own expense.

It’s just like having a road system for Motorists whereby if you are licensed you can be prosecuted but if you are UNLICENSED you can do what you like and the regulator bleats: "we have no jurisdiction."

With Banksia Securities Limited ASIC knew the risks in 2005 and The Australian published Banksia as being on the ASIC list in 2007.  ASIC was criticized again for permitting these high risk financial products to be available to the public, and forgetting to warn Consumers, the regulatory Commissioners would deny they had jurisdiction but were prepared instead, to allow investors to fry.................

ASIC would discuss these issues in high level meetings but only to conjure up ways to NOT do much other than develop the useless FIDO.  FIDO, you ask?  Consumers were told to read the FIDO website that ASIC created, but only after collapses and creditors meetings.

ASIC is not even preparing for public wrath suggesting that if ASIC set an exam.................Glory Be!!!  Financial Planners and Brokers will simply write out the answers for the hapless victims and then tell them to go online.

If the TEST actually worked in order to protect consumers, NO-ONE would invest at all and that would be the end of UNREGULATED scams.  Yet ASIC would then say: BUT ALL LOSSES ARE "IN THE PAST."   ASIC have followed the same pattern with Low Doc lending scams.

If the TESTs worked to keep consumers out of the clutches of Ponzi MIS scams, the entire Unregulated industry would collapse as consumers are then made aware that the products are faulty.  ASIC have known the products to be faulty for close to 14 years.  People invested because ASIC failed to protect them.

As I watched the line of aggrieved retirees file into the Banksia Meeting at Ballarat, the QUEUE extended out of the venue and up the main road.  Similar scenes were observed at Kyabram and also Shepparton.  A possible 14,000 could be infected with this type of MIS scam, whereby $660 million has gone missing to date.

Friday's Meeting with over 1000 retirees in attendance at the Ballarat Meeting,  was a harrowing experience.  Busloads of ordinary older Mums and Dads started to arrive.    Helen, Frank and I witnessed first-hand the heartache of older citizens gathering to be told by the Receivers of Banksia Securities Limited, that there was little to be joyous about at Christmas.  The income has stopped abruptly, as it always does.

The collapse of Banksia Securities Limited, the Cherry Fund and also the insecurity of what the same directors are doing with linked Banksia Mortgage Limited is a scene reminiscent of all the other horrific Managed Investment Scheme collapses. I have attended most of them:  Westpoint, Trio, Fincorp, Opes Prime, Streetwise, Sydney Investment House, BACF, Foresyte, MF Global, MFS and Wellington Capital and 00's of other similarly structured companies.

Yes Consumers did not understand these evil Debenture Products.

I asked Questions about the BORROWERS:  

At the meeting with 1000 in attendance I asked the Question in three parts: 

1) Was there imprudent lending as there seems to be no visible “income stream” just capitalised interest? 

2)  age of “borrowers?  (ie Pensioners using equity loans?)

3)  were there buffer loans whereby people paid payments with banks own money?

Answer from receiver:  “Yes capitalised interest – gave example for people in the room:  $1 million, $200,000 interest on 2 year terms….”             (predictably now defaulting………….) debt is now $1.2 million owed.”  That would certainly blow the LVR figure out the nearest window.

Money placed in land bank deals…overvalued in 2008, still overvalued (by up to 100%) could be worth half………..also unimproved land, unfinished development land projects………….in rural areas.......we have concerns.”

“defaulting loans and BSL has number of Mortgagee in Possession properties.”  This could be pensioner’s homes, whereby they are the buyers of the useless tracts of land.

“Have not looked at age of borrowers as yet.”

“seemed to have capitalized all interest.”   (Just increased debt figures) and admitted “refinancing – we are not going to be able to accommodate refinancing  in future.”

Sounds like a classic full-blown PONZI structure.

Those questions sparked a wave of sub questions from the audience about the borrowers as the inevitable penny dropped.  This scenario had not been mentioned in the receivers reports and hence my question.

The receivers presented their bill of $1.3 million for six weeks work.  This account should be paid by ASIC, not the victims.

ASIC's plan for retirees and pensioners to TAKE A TEST is farcical.  The Chairman suggested: "PDFs are not working for some investors and often it is not because they don't understand, they just don't have time to READ.

Dear Greggie,  most of the people I met on Friday's receivers meeting, and I noticed you and the boys were once again missing in action,  people attendingwere in their 70's and 80's....too busy to read!  You are a disgrace.

Besides, even your predecessor Tony D’Aloisio admitted in 2006, the PDF’s were as thick as a phone book and even he could not understand the content or the risk.  He admitted back then, disclosure wasn't working.  Before that Chairman Geoffrey Lucy was too busy renovating his $20 million office and didn't have time to read the PDS’s or protect pesky consumers.

Our response to Greg Medcraft, Chairman of ASIC: TAKE A HIKE GREG.  Start rounding up the villains, pay the receivers costs and start laying charges under Corporations Law.

All Financial Products ought to be regulated.  Its was ASIC's idea to hand out exemptions to the villains and place Consumers in harm's way.

ASIC is now saying "Our disclosure policy was a dud."  Go figure.  We told you this in 2000.  Commissioners agreed with me.  Medcraft is saying the current system is not working.  Yes Greg, the "Blame the Customer Model" is a disaster.

What Consumers want to know is: what is ASIC going to do about it's 14 year history of Malfeasance in Public Office?

ASIC protects the industry banking and finance industry players and has a conflict of interest in dealing with Consumers, which was pointed out in the Wallis Inquiry.  That gem was spelt out in the Hanratty Critique.

The Federal Government needs to immediately sack the regulator the Australian Securities and Investment Commission as being the Consumer Protector.

The Federal Government needs a Royal Commission into the Banking and Finance Sector.  It is required with some urgency and ought to include the recommendation that a new Consumer Protection Agency should rise from the ashes.

If these Sub Prime Lending products, PONZI's, MIS scams, Bankster delivered financial products continue to bring the entire nation and its economy, closer to a  fiscal cliff, as in America, then someone has to admit the current regulatory oversight of these markets is detrimental to our National Financial Stability.

Its time ASIC came to acknowledge its own short-comings and consulted with the Grass Roots peak consumer body BFCSA, instead of lunching with bankers for "intell."

The Federal Government needs to take a TEST and do some READING into the history of these collapses, same as we do on a daily basis.

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Denise L Brailey


President of BFCSA (Inc)

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Mob: 0401 642 344

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  • doyla66
    doyla66 Sunday, 16 December 2012

    How about those bods at ASIC take a test themselves? Hmmm What about a test for honesty? failure! A test for ethics? Fail. A test for integrity? Yep, failed again. A text for doing the jobs they are actually paid to do? Another failure. What about a test for that their own qualifications are up to date? Ah . . .

    Now, that article in the AFR really does beg a question or 2. If investments in Australia have become so damned difficult then perhaps it is because the regulators (all of them) are not doing their jobs properly. The sharks & shysters seem to be ruling the pollies & regulators. Something wrong there? And, because of the massive failure by those pollies & regulators, they now want to make 'Joe Public' sit a test before they can invest?? Huh?? Something is definitely wrong if we're going down that path here in Oz.

  • doyla66
    doyla66 Tuesday, 18 December 2012

    Do your due diligence,Yep did all of that .Researched the company that we were to invest in called ASIC,APRA tax office,Macquarie bank,nothing flagged everything above board,then get penalised by the courts for being more informed and prepared to take the risk,go figure.
    What we didn't bank on was the Mortgage Manager/Introducer,falsifying and forging our documentation to fit his needs.
    The Bankers and the regulators need to take a test,how to RED FLAG A POTENTIAL CROOK.

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