GLOBAL SUB-PRIME CRISIS

BANKILEAKS

Click on our Secret Library of Evidence ------>

    BANKILEAKS Secret Library

Loan Application Forms (LAF's)  

    Bank Emails to Brokers  

    Then Click on 'VIEW NOTEBOOK'

Join us on facebook
 

facebook3           facebook2 

BFCSA
MORTGAGE
DISTRESS SOS

What BFCSA Does...

BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.

Visitors

Articles View Hits
670354

Whistleblowers' Corner!

To all mortgage brokers, BDMs and loan approval officers! 
Pls Call Denise: 0401 642 344 

"Confidentiality is assured."

Cartoon Corner

Lighten your load today and "Laugh all the way to the bank!"

Lee Doyle

Led by award-winning consumer advocate Denise Brailey, BFCSA (Inc) are a group of people who are concerned about the appalling growth of Loan Fraud around the world. BFCSA (Inc) is a not for profit organisation in the spirit of global community concern and justice.

Click on the Cluster Map.

  • Home
    Home This is where you can find all the blog posts throughout the site.
  • Categories
    Categories Displays a list of categories from this blog.
  • Bloggers
    Bloggers Search for your favorite blogger from this site.
  • Login
    Login Login form

Failed debenture issuer Banksia Securities offered “at call deposit accounts”

Posted by on in From My Window
  • Font size: Larger Smaller
  • Hits: 2274
  • 2 Comments
  • Print
 

Australian Financial Review Matthew Drummond
Failed debenture issuer Banksia Securities offered “at call deposit accounts” potentially in breach of laws that make accepting deposits by non-banks a criminal offence.

The Australia Financial Review has obtained a “statement of a deposit account” issued by Banksia to one of its 3000 clients who are owed $660 million.

A source involved in the investigation confirmed the failed business operated at call deposit accounts.

John Price, the commissioner at the Australian Securities and Investments Commission who will head an internal taskforce into the collapse, said any the question of whether Banksia was illegally running a banking business was a matter for the Australian Prudential Regulation Authority.

Banksia accused of taking illegal deposits

Greg Medcraft says ASiC plans to take a closer look at the debenture industry. Photo: Michael O’Sullivan

APRA did not return calls.

The Banksia collapse has returned the spotlight to the wide regulatory gap between banks, which are closely supervised by APRA, and companies who issue un-rated, unlisted debentures and invest the proceeds in risky construction and property loans.

Such companies receive comparatively no oversight despite many collapses. For the past five years, following the $300 million Westpoint collapse, they have been required to disclose whether they hold suggested minimum amounts of capital and face no sanctions if they do not.

Mr Price said his taskforce would make recommendations to the federal government but ultimately the question of whether such shadow banks should face prudential supervision, as occurs with real banks, was a matter for government.

He added that doing so would be a major change that would overturn a key plank of the 1997 Wallis Inquiry that created Australia’s system of financial regulation.

“The Wallis Inquiry report suggested finance companies should not be subject to full prudential regulation. That leaves open the question of whether there should be a lesser regime for these types of companies,” he said. “That’s a question for government and ultimately it’s a significant decision because in most areas Australia has a very free market in terms of investment products. In most cases as long as there’s disclosure of the risk people can invest, regardless of whether its a very risky product.”

Mr Price said his taskforce would provide data on the debenture sector’s performance and report to the government “in a matter of weeks rather than months”.

Analysis by the Financial Review of the 34 companies identified by ASIC in 2007 as issuers of debentures that are not listed on a stock exchange, not rated by a ratings agency and lend their funds as mortgages, shows that 16 have since collapsed owing investors $1.5 billion.

Of the 18 which still operate 12 do not have enough capital to meet ASIC’s suggested minimum capital ratio. They are free to continue raising money because they disclose their lack of capital in their prospectuses.

The Banksia client who provided her statement of deposit account is an 80-year-old retired dairy farmer who entrusted the business with funds to pay for her funeral.

The retiree, who asked not to be named, said she never felt the need to read the prospectus because she had “banked” with Banksia and its predecessors since the 1960s.

“We treated it like a bank. You could just go in and withdraw your money,” she said. “I wasn’t chasing the big money.”

She received 5 per cent on her term deposit, a rate she could have been obtained from a regulated bank.

Steven Klimt, a partner at law firm Clayton Utz, said it was a criminal offence for companies who are not authorised deposit-taking institution, APRA’s term for banks, to accept deposits.

A spokesperson for Banksia’s directors declined to comment.

“Its sounds like what they were doing may amount to carrying on banking business and as they were not an ADI they may be in breach of the Banking Act,” he said when told of Banksia’s at call deposit business. Mr Klimt added that the “banking business” was not defined in the act and the question would turn on exactly how Banksia operated its services.
http://afr.com/p/national/banksia_accused_of_taking_illegal_hPWWZakBObCJYeVyIfYktK

Last modified on
Rate this blog entry:

Comments

  • doyla66
    doyla66 Wednesday, 14 November 2012

    Is A~SIC commissioner Price head of an internal task-force? or tail of "Special~Pass~Force" ~stating "illegal" banking APRA's task???

  • doyla66
    doyla66 Wednesday, 14 November 2012

    If the Wallis Inquiry set this up in 1997 then a review of is well and truly overdue. It sounds like some people are far too attached to systems that have not worked and will not work going forward.
    Shadow banking? Quite common in Australia - when ASIC have the time to look. The problem has been that ASIC isn't really good at looking and knowing what to look for. They filter out a lot of important information when they're concentrating on one area only. We see things that ASIC overlooks.
    Why can't they get someone truly independent to oversee any taskforce? A fresh set of eyes are a decided asset when reviewing.
    At least ASIC seems to be getting quicker about responding. Whether they actually do what they say is another matter.
    ROYAL COMMISSION INTO BANKING - WIDE TERMS OF REFERENCE

Leave your comment

Guest Sunday, 26 January 2020