Michael Pascoe writes:

Déjà vu all over again…another scandalous
corporate collapse, another round of watchdog soul-searching and a promise to
change the regulatory system.

This time something good might come of it
though as the Smage has ASIC facing the reality that its totally over-the-top financial product
disclosure requirements are self-defeating.

This particular mess was overseen by the
ex-Parramatta MP and current Macquarie Banker, Ross Cameron – the financial
product disclosure statements the size of telephone books, guaranteed to
prevent the average punter reading the essential bits.

Numerous forests have been surrendered to
these worthless documents, but it’s taken the Westpoint scandal to make the
obvious obvious to ASIC and the Federal Government.

There are other aspects to Westpoint though
that go well beyond what is or isn’t in the fine print. Neale Prior in the West
Australian has an intriguing story about the administrators examining the train wreck
finding that the dodgy mezzanine scheme companies had failed to register mortgages
over Westpoint development properties:

Investigations
by insolvency accountants from PricewaterhouseCoopers and Ferrier
Hodgson have
revealed that mortgages were not lodged for schemes covering two
Melbourne properties and one in North Sydney despite Westpoint
promotional material
promising second-ranking or third-ranking mortgages to help protect
investors.

The lack of mortgages has thrown a cloud over the distribution of any money
that might be left over once receivers appointed by top-ranking secured
creditors get whatever they can out of Westpoint’s Mount Street development in
North Sydney and from the Bayview and Market Street projects in Melbourne.

There’s naught a product disclosure statement can do about that.

The finance industry itself should take
some of the blame for the product disclosure statement farce though – if the
banks and insurers had more faith in themselves and weren’t so easily
intimidated by lawyers, they could well have tested ASIC’s requirements with
plain-English, cut-to-the-chase documents.

But they didn’t. Wonder if there could be
the occasional sales person out there who was happy to have customers snowed…