The Australian Securities and Investments Commission (ASIC) has announced it has formed an internal taskforce to examine the failure of Victorian debenture issuer Banksia Securities Limited with a view to review the broader regulation surrounding the Australian unlisted debenture sector.

 

The taskforce will be led by Commissioner John Price and will comprise business units fromacross ASIC to deliver recommendations to Treasury.

 

“The failure of Banksia, an unlisted debenture company that has operated a mortgage financing business across a large part of regional Victoria, will affect the lives of many everyday Australians. ASIC wants to take a closer look as it is another area of retail-funded shadow banking,” ASIC Chairman Greg Medcraft said.

 

Currently there are laws surrounding disclosure and the conduct of debature issuers, but ASIC has announced it will ‘lift the regulatory intensity’ to make sure investors and clients are properly informed.


“The taskforce will review the extensive work we’ve done to date around the regulation of the unlisted debenture sector. The taskforce’s work may involve making recommendations to Treasury about law reform given we have pushed the existing conduct and disclosure regime to its limit,” Mr Medcraft said.

“We will also work closely with Banksia receivers and managers McGrath Nicol to try and get the best result for Banksia investors and retail clients who Banksia provided credit to. Importantly, we’ll also continue to remind debenture trustees of their obligations as gatekeepers to protect investors and monitor debenture investments - particularly bad loans and liquidity problems.”