Last weekend, Fincorp, one of Australia's most prominent property finance companies was placed in administration, with debts of three hundred million dollars.
Fincorp has been offering unsecured high interest to investors willing to part with their money; money used to fund property development projects.
Fincorp is now dead in the water and most investors have done their dough with little hope of recompense. Most investors approached Fincorp directly because the company was a big advertiser. Unlike the Westpoint debacle, there was little referral from financial planners, the middle-men who may be held responsible for the Westpoint losses. Simply, there will be no-one to sue.
Financial scribes including those writting for The Age "Money" liftout on Wednesdays have been warning investors to be careful of such "mezzanine" funds for some time.
However as recently as last week, Money has been running large advertisements for Fincorp.
In today's edition of Money, John Collett has written an article "Trouble at Fincorp", outlining the company's woes.
I hope Collett's readers didn't respond to Fincorp's ad last week.
ASIC has advice about investing with this type of company.
2 comments:
My mother, who invested a large amount of money with Fincorp in January of this year, would have no idea what a "mezzanine fund" means. She based her decision to invest, not only on the types of advertising you mention (the 'sleep soundly at night" type ads) but also on information supplied directly to her from Fincorp. This information stated that for every dollar she invested with Fincorp, that dollar was secured by assets held in trust by Sandhurst Trustees, a subsidiary of the Bendigo Bank.
Re ASIC - whatever 'advice' they have given, it was not given clearly or directly enough. I say this as I have now become aware that ASIC knew full well that there were problems with Fincorp several years ago. In the light of that knowledge, presumably based on financial reports supplied by Fincorp to ASIC, why were Fincorp not stopped from stealing money from these elderly investors well into March of this year? My other research indicates that ASIC did in fact put STOP orders on several companies operating on a similar model to Fincorp at around the time that it was rapping Fincorp over the knuckles for its misleading advertising. Why was Fincorp a special case and allowed to continue its grossly unethical and fraudulent operations?
I'm sorry to hear what has happened to your mother's savings, Tania.
It may be that ASIC has not done enough to protect investors, especially those targeted directly through the media by Fincorp.
I wonder whether this is something that the ACCC should get invoved in. Their brief is to protect consumers.
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