Friday 3 November 2006 – LAWFUEL – Law Jobs, Law News – Mr James Alexander Scott, of Mentone, Victoria, has pleaded guilty in the County Court of Victoria to one count of carrying on a financial services business without holding an Australian Financial Services Licence (AFSL) and 15 counts of dishonest conduct in relation to financial products. Mr Scott was a director of Homesafe Equities Pty Ltd (Homesafe), a company that issued builders warranty bonds in Victoria between June 2003 and March 2004. The bonds issued by Homesafe were insurance products that required Homesafe to hold an AFSL.
Neither Mr Scott nor Homesafe held such a licence. Homesafe contended that it was the manager of what it called a ‘Captive Pool’ and that the insurance it provided by way of the bonds was fully reinsured. ASIC alleged that, unknown to the builders who obtained the insurance certificates, there was no pool of money set aside in the ‘Captive Pool’ to pay any claims, and that contrary to what was claimed, full reinsurance was not in place in respect of any claims that might have been made. Homesafe was placed into liquidation on 13 August 2004 following an application by ASIC to the Supreme Court of Victoria that it was unable to pay any claim made on the bonds it had issued.
Mr Scott will reappear in the County Court on 10 November 2006 for sentencing. Mr Scott’s father, Anthony Scott, has also been charged for his involvement in Homesafe and is due to appear in the County Court on 23 November 2006. The Commonwealth Director of Public Prosecutions prosecuted the matter.
Background Builders warranty bonds protect homeowners against non completion and building defects for two to six years in the event that the builder becomes bankrupt or dies. Builders cannot obtain building permits without first obtaining a warranty bond. For further information contact: Allen Turton Deputy Executive Director, Enforcement Telephone: 02 9911 2338 Mobile: 0411 549 236 Emma Forehan ASIC Media Unit Telephone: 03 9280 3354 Mobile: 0409 702 310