Banksia AFSL cancelled by ASIC

ASIC has cancelled Banksia Mortgages Limited's Australian financial services (AFS) licence.

Banksia Mortgages is one of four subsidiaries of the Victoria-based Banksia Financial Group, which collapsed in 2012.

Others include the debenture issuer Banksia Securities Limited, Cherry Fund Limited and BFG Management Pty Limited.

In August 2013, the Supreme Court of Victoria made orders authorising Banksia Mortgages to wind up the Banksia Mortgage Fund on the basis that it was just and equitable to do so.

In December 2013, a sale of Banksia Mortgage Fund's portfolio of loans saw $85 million distributed to 1,200 investors.

In April 2014, Banksia Mortgages applied to ASIC to cancel its AFS licence to minimise ongoing costs to investors and to allow it to transfer money to Banksia Securities Limited which it had been maintaining for the purposes of liquidity requirements under its AFS license.

Most investors in Banksia Mortgage Fund have received 100 per cent return of their money plus interest. Around 108 investors are yet to be paid all of their money back.

McGrathNicol, appointed receiver to Banksia Securities Limited and Cherry Fund Limited in October 2012, has so far paid out 80 cents in the dollar to Banksia Securities Limited investors.

Banksia Securities Limited had been financially supporting Banksia Mortgages, the responsible entity for the contributory mortgage scheme Banksia Mortgage Fund, since the appointment of McGrathNicol, to allow it to continue to operate.

Banksia Mortgages self-reported a breach of its AFS licensee financial requirements in April 2013. However, ASIC decided against taking AFS licensing action at that time. Instead, ASIC closely monitored Banksia Mortgages as it took steps to wind up the Banksia Mortgage Fund.

ASIC considered this approach was the best way to maximise the return to investors in the circumstances.

While Banksia Mortgages' AFS licence has been cancelled it continues, in effect, for the limited purpose of allowing it to wind up Banksia Mortgage Fund.

ASIC’s investigation into the failure of the Banksia Financial Group, including Banksia Securities Limited, continues.

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