Helen Coonan (NSW, Liberal Party, Minister for Communications, Information Technology and the Arts) Share this | Hansard source

Thank you to Senator Wortley for the question. I assume that Senator Wortley is referring to an article in the Financial Review, because that is where the Labor Party usually gets its inspiration for these sorts of questions. But it is wrong; there is no legal loophole. In 2003, ASIC engaged Westpoint in discussions about structuring its fundraisings as regulated offerings and subsequently started court action in the Supreme Court of Western Australia when those discussions failed. The Supreme Court of Western Australia ruled that the fundraising activities of Westpoint in question amounted to the offering of interest in managed investment schemes. Managed investment schemes are in fact fully regulated through a separate chapter, 5C, in the Corporations Act 2001. Managed investment schemes are already financial products as defined in the act and therefore fall under the licensing and disclosure requirements contained in chapter 7 of the act.

The recent appeal decision of the Supreme Court of Western Australia has not changed the situation with regard to Westpoint type schemes that are subject to the current law—that is, there is no loophole. ASIC does have the powers it needs to ensure that proper disclosure of information to retail investors is provided and that such schemes are competently run in the interests of members. The regulation of financial services has been substantially reformed since the Westpoint schemes were first offered but, based on these court decisions, there is no apparent regulatory gap under the current law.