ASIC today released Regulatory Guide 45 Mortgage Schemes – improving disclosure for retail investors. This guide establishes eight benchmarks for funds like Principled Mortgages™ and requires us to disclose to investors whether or not we meet the benchmarks, and if not, why not.
Principled Mortgage Investments Ltd had made its own submission to ASIC in response to Consultation Paper 99 Mortgage Schemes – improving disclosure for retail investors in early August 2008.
Our submission recommended some of the benchmarks should be compulsory. For example, lending money from our fund to related parties of Principled Mortgage Investments Ltd is prohibited under the fund’s constitution, however ASIC will allow other Mortgage Funds to continue to do this. We recommend the practice should be banned from the industry.
There are also some Mortgage Funds that use the scheme’s assets (which are really investors’ assets) to borrow money so that they can grow their fund more quickly. Principled Mortgages™ is opposed to this practice and recommended it also be banned.
David Rush, Chairman of Principled Mortgages™, today confirmed that work had already begun to ensure Principled Mortgages™ made all disclosures required under the Regulatory Guide. Mr. Rush also expected that Principled Mortgages™ would create a new website to assist with making the disclosures on a more regular basis.