Failed mortgage lender licence in suspension
The Australian Securities and Investments Commission (ASIC) has suspended the Australian Financial Services Licence of failed debenture issuer and mortgage lender Provident Capital Limited.
The suspension is for a period of six months and is line with paragraph 915B(3)(b) of the Corporations Act under which ASIC can suspend a licence upon request by the licensee.
Provident Capital is currently in liquidation after creditors rejected a work out proposed by Provident Capital directors and receivers — PPB Advisory — who were appointed in late 2012.
PPB Advisory has since closed two funds from the group — the Provident Capital Monthly Income Fund and the Provident Capital High Yield Fund — after being unable to find new managers to operate the funds. As a result PPB Advisory has sold off properties within the funds financed with high interest loans.
However ASIC has indicated that while the receivers have requested the suspension, and it has been granted, it will consider the licence as remaining active only for the purposes of the winding up of the two funds.
At the time of being placed in liquidation, Provident Capital had about 3400 retail investors. According to comments made by Provident Capital investors on the Provident Capital Creditors Action Group Facebook page, Provident Capital Monthly Income Fund investors have received 80 cents in the dollar while debenture investors with Provident Capital have received 30 cents in the dollar.
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