The Australian Securities and Investments Commission (ASIC) has banned three Victorian men from providing any financial services following an investigation into a builders warranty insurance product.

ASIC permanently banned Mr James Scott, of Mentone, from providing any financial services, and his father, Mr Anthony John Scott, of Blackburn, from providing any financial services for a period of 5 years. ASIC also banned Mr Gary Mepstead, of Patterson Lakes, from providing any financial services for 3 years.

ASIC conducted an investigation into the activities of Homesafe Equities Pty Ltd (Homesafe), and Builders & Owners Pty Ltd (B&O) and alleged that the two companies provided and distributed builders warranty insurance in Victoria between June 2003 and February 2004.

The bannings of Mr Scott and Mr Scott relate to their conduct in controlling Homesafe. Mr Mepstead’s banning relates to his role as director of B&O.

ASIC’s investigation found that:

• between June 2003 and February 2004, Homesafe, under the control of Mr Scott and Mr Scott, issued approximately 790 ‘Builder’s Warranty and Financial Guarantee Bonds’ to builders in Victoria;
• in selling the bonds, Homesafe operated a financial services business and insurance business without the necessary licences required by the Corporations Act 2001 and the Insurance Act 1973;
• Mr Scott and Mr Scott made false and misleading statements in relation to the Bonds to builders;
• Mr Scott and Mr Scott engaged in dishonest conduct in relation to the bonds, in their dealings with the Building Commission and the Australian Prudential Regulation Authority;
• between June 2003 and February 2004, B&O, under the control of Gary Mepstead, also distributed a large number of these bonds;
• in distributing the bonds, B&O operated a financial services business without an Australian Financial Services licence;
• Mr Mepstead had made false and misleading statements in relation to the bonds to builders; and
• given their conduct, Mr Scott, Mr Scott and Mr Mepstead, would not comply with financial services laws in the future.

The three men have the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.

ASIC previously obtained orders, on 13 August 2004, in the Supreme Court of Victoria, appointing Mr Gess Rambaldi, of Pitcher Partners, liquidator of Homesafe.