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

I thank Senator Sherry for the question. The information I have in relation to the ABC’s Four Corners Westpoint special, to which Senator Sherry refers, is that Mr Beck was a director of a number of key Westpoint entities. Based on publicly available information, there are ample grounds for suspecting that there have been a series of breaches of the Corporations Act 2001. Conviction of certain breaches of the act has certain consequences that include the automatic disqualification of a person from managing corporations, and there is a strong possibility that Westpoint was insolvent at an earlier stage than originally suspected. The Corporations Act provides for heavy civil and criminal penalties for directors engaging in insolvent trading.

Senator Sherry specifically raised issues to do with compensation, commissions and losses in relation to superannuation. The program reported that some financial planners who promoted the Westpoint investments do not have professional indemnity insurance in place. This indeed may create difficulties for investors who receive defective advice from these planners in obtaining compensation. Appropriate compensation arrangements will become mandatory for all financial service licensees on 1 July 2006 after the transitional phase ends.

In relation to self-managed superannuation funds, many of the Westpoint investors decided to invest their retirement savings outside the prudentially regulated superannuation sector. They sought to gain full independent control over their investments by establishing self-managed superannuation funds. Taking this step necessarily implied assuming greater responsibility for their investment decisions. The government has put in place arrangements that are due to come into effect on 1 July this year in relation to dealing with appropriate compensation arrangements, which will become mandatory for all financial service licensees.