Investors not protected in new scheme
Victims of a collapsed multi-million-dollar property investment scheme which cost many elderly Australians homes and life savings would not be covered by a compensation plan currently before parliament.
At a Senate inquiry examining the 2019 collapse of the Sterling Income Trust, it was heard the financial support scheme designed for financial misconduct victims when a firm goes under would not help many of the retiree investors.
CPA Australia's Keddie Waller called for the compensation bill to be expanded, ensuring those in managed investment schemes like Sterling would also be covered.
Sterling targeted elderly investors who would sign long-term tenancy agreements and use returns from a lump-sum investment to pay rent.
The inquiry continued its focus on Thursday on the Australian Securities and Investments Commission's role in allowing the scheme to operate.
Annabelle Crowther, whose father lost $171,000 in the investment, said it was "utterly disgraceful" ASIC permitted the scheme when a director had registered more than 100 businesses using different variants of his name and birth date.
"To allow a person who has had prior history of a retirement fund collapse (to be) able (to) set up again without a strong regulatory body is asking for trouble and that's exactly what has happened here," she said.
Labor senator Louise Pratt questioned ASIC's finding Sterling's product disclosure statement was adequate.
"I don't see how a product disclosure statement can be adequate in this case ... unless it says our marketing says you're offered a 15 per cent return, but actually we will raid all your money if we don't reach that in order to pay your rent," she said.
Liberal senator Paul Scarr expressed concern ASIC examining investment schemes before they start could provide "an implicit guarantee or endorsement".
He said finding "red flags" would require "all sorts of analysis".
Ms Crowther, a former Sterling sales representative, said it marketed its New Life Lease scheme through community newspapers, radio and by putting leaflets in mailboxes, while it also approached organisations such as bowls clubs to do presentations.
Her written submissions say Raymond Jones, the director involved with more than 100 companies, once told her "ripping off and stealing from seniors is a crime ... worse than murder".
The committee is due to report by December 1.
Get the latest news from thewest.com.au in your inbox.
Sign up for our emails