Consumer disclosure and protection measures expanded

All retail debentures and promissory notes will be subject to the full range of consumer disclosure and protection measures that currently only apply to debentures, according to the Minister for Superannuation and Corporate Law, Senator Nick Sherry.

Sherry has released the Corporations Legislation Amendment Bill relating to debentures and promissory notes, which he said would harmonise the legal regime.

“I have been deeply concerned about this issue since before coming to government. The losses of investors in companies such as Westpoint saw no response from the former Government."

According to Sherry, the changes will include the requirement to have a trust deed, trustee arrangements and to issue a full prospectus.

“These changes are a decade overdue and will reduce the risk of another Westpoint.” Sherry said.

In addition, the new laws will boost transparency in the debenture-issuing sector for the benefit of investors by establishing a public register of debenture trustees, which will be set up and maintained by the Australian Securities and Investments Commission (ASIC).

“Together, the harmonisation of protection and the new publicly available register of trustees will significantly enhance the level of consumer protection in an area of our financial services that needed reform,” Sherry said.