Deposit Power back in the market following insurance scuffle

Sydney-based deposit bond provider Deposit Power has announced that it is back in the market after being on a trading halt since February, and that it is now backed by bonding and commercial insurance provider Lombard.

The company was forced to close shop following the placement of Auckland-based CBL Insurance into interim liquidation by the High Court, reportedly affecting 10,000 residential, commercial and property investors.

Deposit Power general manager Grant Bailey admitted that the CBL liquidation was “highly disruptive” and apologised to those impacted, adding that the company is “actively committed” to helping them.

“We’re now focused on re-engaging with our long-standing partners and the general broking community to reinstate our position as Australia’s leading supplier of deposit bonds,” Mr Bailey said.

“We’ve also implemented some key initiatives to mitigate future risk and strengthen the product offering.”

The deposit bond provider said that an independent custodial fund has been established with Perpetual Corporate Trust, which will see Deposit Power receive and process all claims and Perpetual process claim payments locally.

The company additionally noted that a reinsurance facility has been created, the majority of which was rated A and AA by Standard & Poor’s.

“These two measures are a powerful combination that significantly reduces customer exposure,” Mr Bailey said.

Deposit Power affirmed that it will continue to use the same online application and approval system, with the issuance of guarantees provided in real time to authorised users.

Its fee structure and qualification criteria will also remain unchanged, as will its broker training programs, back-end support and direct access to assessors, the company added.

“We’ve been very fortunate to retain many of our long-standing team members, including assessors, operations and broker support BDMs, so brokers can expect to continue ‘business as usual’ with familiar systems, faces and processes,” Mr Bailey said.

Following the collapse of CBL, independent building warranty provider Stamford Insurance had stepped in with a new scheme to protect CBL clients and “prevent the situation [from] spiralling out of control”, the New Zealand Herald had reported. 

[Related: Brokers urged to close deals with A+ credit-rated deposit bonds]