Assist Finance Media Centre

Frequently Asked Questions

What happened at Assist Finance?

Assist Finance was established in 1960 and operated successfully under a series of different owners from that time.

Assist Finance was purchased by Jason Di Iulio for $ 3,200,000 in 2007.

Assist Finance operated as a non-bank lender that was funded by unsecured investments and direct mortgage investments. The operations of Assist Finance were governed by ASIC.

The type of investment activity undertaken by Assist Finance carried higher risks for greater rewards but greater potential losses. Assist Finance always disclosed this to its investors in its ASIC registered prospectuses.

Notwithstanding this Assist Finance operated successfully for more than 50 years paying above market returns to investors. In 2013 ASIC intervened in Assist Finance as a result of heightened supervision of the industry following the failure of numerous other investment funds. Many had failed their regulatory obligations and obligations to their investors. Assist Finance had not. ASIC's intervention was purely discretionary.

ASIC issued a Stop Order Notice on Assist Finance's Prospectus 14 on 4 June 2013. Assist Finance had since its inception always complied with all regulatory requirements and delivered excellent investment returns and was compliant at the time of the issue of the Stop Order. In fact, in the year ending 30 June 2012, Assist made a pre-tax profit of $636,452, up from $457,792 in the previous financial year. These reports were reviewed and audited by Ernst & Young and are publicly available. ASIC required that additional disclosures be included in the Prospectus. These added disclosures related to the provision of second mortgage loans, the associated risks and collection procedures, determination of the nett security value and the forecasting of cash flows for second mortgage loans.

Assist Finance and its legal advisors' engaged in ongoing discussion and correspondence with ASIC. Assist Finance explored numerous ways to address ASIC's disclosure requirements and meet their disclosure requirements and their associated increased compliance costs, but to no avail. It was well accepted that, in particular during an economic downturn, it is necessary to raise unsecured notes to maintain liquidity. There is, from time to time, an imbalance between the term for redemption of unsecured notes and the realisation from loans. The ASIC Stop Order notice precluded this.

As a result, and in the absence of reaching an acceptable disclosure outcome with ASIC and with the lodgement of the Stop Order notice, Assist Finance's ability to continue became uncertain and ultimately made the Assist Finance business unviable. The combination of all these factors presented the Assist Finance Board with an insurmountable challenge and led to the Board seeking independent advice that resulted in the recommendation to proceed with a Moratorium in the interests of maximising unsecured investor returns.

"We were disappointed that, despite our best efforts, we could not negotiate a better outcome for the business and for unsecured investors. We had no choice but to accept ASIC's decision and seek to implement a course of action under advice that would deliver the maximum return to Noteholders," said Mr Jason Di Iulio.

Unsecured investors were then provided with numerous detailed reports prepared by both Assist Finance and its Trustee, Cremorne Capital Limited, along with other independent consultants, in order to consider whether to place Assist Finance into Administration or to implement and orderly realisation of the assets of Assist Finance, or Moratorium , as recommenced by the various Independent reports.

Unsecured investors, being fully informed as determined by ASIC, voted overwhelmingly in favour of implementing the Moratorium , which in effect meant that Assist Finance would realise the assets of Assist finance over a two year period and after costs any surplus would be distributed to unsecured investors.

The terms of the Moratorium required Assist Finance to operate on a minimum operational cost structure, required cash contributions by Jason Di Iulio and financial concessions from all Directors of Assist Finance. All of which were made during the course of the Moratorium and confirmed by both the Trustee and Ernst & Young.

The terms of the Moratorium also included the requirement that the operations of the Moratorium were to be overseen by Assist Finance's Trustee, the Trustee's independent consultant, an Adelaide based Chartered Accountant, in addition to Assist Finance's independent Auditors Ernst & Young.

The Moratorium was implemented on 31 January, 2014 and although was originally scheduled to complete on 31 January, 2016 was extended with the approval of the Trustee to 31 December, 2016, to permit the completion of Assist Finances' outstanding financial reports and the collection of its remaining loans, at which time the Moratorium came to an end and was completed.

At the completion of the Moratorium being 31 December, 2016, Assist Finance had no remaining assets or staff and in effect the company became a non-trading dormant entity.

"Whilst the performance of the Moratorium did not achieve the outcome originally estimated primarily as a result of compliance costs including Trustee Fees, the Moratorium has delivered the best possible financial outcome to unsecured investors in the circumstances. This has been confirmed by various independent reports." said Jason Di Iulio.

"There is no question that a number of unsecured investors are dissatisfied with what has occurred, however the fact remains that higher return investments always come with higher risks. These risks were always disclosed to unsecured investors and notwithstanding they chose to avail of the higher reruns for more than 50 years. The reality is, every action and every cent, every cent, has been accounted for as determined by the Assist Finance's Trustee, their independent consultant and Assist Finance's independent and external Auditor, Ernst & Young. Futher all of this has been provided to unsecured investors in numerous detailed reports. Although unsecured investors may not be happy with the resultant outcome, the facts are the facts." said Jason Di Iulio.

What is a Stop Order?

A Stop Order is a direction from ASIC which meant that Assist Finance was no longer permitted to take on new unsecured investors but only deal with its existing unsecured investors. In effect, it meant that no more monies could be raised by Assist Finance, until the Stop Order was lifted.

The Stop order was lifted by ASIC after the implementation of the Moratorium at which time it was irrelevant as the Moratorium terms were such that no new funds were to be raised.

Why did ASIC issue a Stop order on Assist Finances' Prospectus 14?

"That is a question for ASIC. What is known is that ASIC's interventions were industry wide and were initiated following the substantial failure of numerous other larger investment funds. It blatantly became clear that ASIC no longer favoured the industry.

"We were quite surprised by it actually, particularly considering that Assist Finance was continuing to meet and exceed its regulatory benchmarks and had just posted a $261,265 audited half year profit for the period ending 31 December, 2012," said Mr Jason Di Iulio.

The Stop Order was actually lifted by ASIC, however it was after the implementation of the Moratorium at which time it was irrelevant as the terms of the Moratorium were such that no new funds were to be raised in any event.

Do you believe that ASIC made the right decision in relation to Assist Finance?

"Whilst we acknowledge it is ASIC's prerogative we have always disagreed with their manner of implementation. Assist Finance was profitable; it met and exceeded all benchmarks and provided excellent returns to unsecured investors over more than five decades. Assist Finance achieved a clean audit in the month before ASIC issued its Stop Order. If you compare the performance and state of Assist Finance at that time, to the resulting ultimate outcome to its unsecured investors necessitated by the issue of the Stop Order the answer is quite obvious, I would have thought," said Mr Jason Di Iulio.

It is well documented, given the failure of various funds before and around that time of the issue of the Stop Order, that ASIC had taken a negative view of the industry and was undertaking a review of the industry which included increased disclosure requirements.

Assist Finance, at the time and according to ASIC, was the only second mortgage lender raising monies on unsecured investments with the other operators being first mortgage lenders. This made it appreciably more difficult to achieve an acceptable disclosure outcome with ASIC. It is our view that ASIC, given the failures of various debenture funds at the time, had formed the view that the debenture industry was no longer an appropriate means of investment for retail investors and sought to address this.

Until ASIC intervened in 2013, Assist Finance had for more than 50 years been a successful business, delivering excellent investment returns and complying with all set regulatory benchmarks. If ASIC had not intervened, it is to be expected that Assist would have continued to trade as it had previously.


In fact in the year ending 30 June 2012, Assist made a pre-tax profit of $636,452, up from $457,792 in the previous financial year," said Mr Jason Di Iulio.

Were investors fully informed ?

"Absolutely. Noteholders were at all times fully informed ahead of making decisions. ASIC has confirmed this," said Mr Jason Di Iulio.

Why did ASIC review Assist Finance's auditors, Ernst & Young?

As reported in the media in September 2014, ASIC reviewed Ernst & Young's audit of Assist Finance's 2011 and 2012 financial reports. Assist Finance has been advised that following an extensive investigation including independent expert reviews, the ASIC review is complete and the audit and financial reports were found to be in completely in order and the matter is complete.

Interestingly, it was the ASIC preliminary review of those same accounts which led to ASIC issuing their Stop Order on 4 July 2013, whereas their more detailed review has found those accounts to be in order.

Why did ASIC take action against Assist Finance for not lodging its financial reports?

It was always the view of Assist Finance that the purpose of the Moratorium was to maximise returns to its unsecured investors. This involved the reduction of costs, including compliance costs. Assist Finance questioned the value of producing financial reports when the company was subject to a Moratorium overwhelmingly approved by its unsecured investors. Assist Finance on numerous occasions sought ASIC's approval to be excused from producing the six-monthly financial reports and other compliance documents.

ASIC confirmed in early 2015 that the reports must be produced. Assist Finance commenced the preparation of its outstanding financial reports for 31 December 2013, 30 June 2014, 31 December 2014, 30 June 2015 and 31 December 2015 and it updated ASIC on the progress and timing of the lodgement of the reports. Notwithstanding this, ASIC commenced its legal action.

On 14 June 2016, Assist Finance lodged its 31 December 2013 and 30 June 2014 audited financial reports, which came at substantial cost to unsecured investors. With the aim of reducing costs, Assist Finance again sought relief from the production of the subsequent financial reports on the basis that the 30 June 2014 report accurately reflects all matters up to 14 June 2016 and that the subsequent accounts would be a re-statement of reports to 30 June 2014. Once again ASIC did not grant the request and significant monies were again spent on the production of those reports.

The usefulness of these reports was also questioned by the courts and as a result sought to only implemented the minimum penalty permissible under law. 

Why was a Statutory Demand issued by Assist Finance's Trustee claiming that $ 9.9m was owed to it by Assist Finance ?

The terms of the Moratorium, which unsecured investors overwhelmingly approved, stated that on the basis that all terms of the Moratorium were completed by 31 December, 2016, then at that date Assist Finance would be released from all liability owing to the Trustee, under the terms of the Trust Deed that existed between Assist Finance and its Trustee.

The Trustee claimed that the terms of the Moratorium were not complied with and if this was the case then this debt would have actually been owing by Assist Finance to its Trustee. On this basis, the Trustee issued its Statutory Demand for this amount.

Assist Finance always maintained that this was not the case and took the matter to the Federal Court of Australia to have the Trustee's claim dismissed given that the basis of the Trustee's claim was not supported by the fact or evidence..

"It was the view of Assist Finance that all of the terms of the Standstill Deed were complied with and on this basis Assist Finance took action against to defend against the Trustees Statutory Demand " said Mr Jason Di Iulio.

On 12 May, 2017 the Federal Court of Australia rejected the Trustees claims, found Assist Finance's defence of the claim to be correct account of the facts and dismissed the the Trustees claim and Statutory Demand in its entirety. In addition the Federal Court of Australia ordered Assist Trustee to pay all of Assist Finance's costs in respect to these proceedings.

The Trustee has now formally acknowledged that the terms of the Moratorium were actually properly performed and that Assist Finance and all parties to the Moratorium fulfilled their obligations without exception. Given this, the Trustee has also acknowledged that no debt exists between it and Assist Finance and has accordingly forever withdrawn all claims against Assist Finance and its Directors.

"The Federal Court of Australia has twice vindicated Assist Finance's operation of the Moratorium and that the company does not owe any money to anyone and that all monies have been accounted for. It confirms that the operations and actions of Assist Finance are in order. This has now also been confirmed by Assist's Trustee which brings this matter to a close." said Mr Jason Di Iulio.

Where did the money go?

The assets of Assist Finance consisted of loans advanced to borrowers, its mortgage fund and various other assets.

All of the loans advanced to borrowers were collected, discharged or written off with the full consent of Assist Finance's Trustee and the Trustees independent consultant. This was confirmed by Assist Finance's auditors Ernst & Young.

The mortgage fund was sold to an independent party, with the full consent of Assist Finance's Trustee, after an extensive marketing campaign. This was also been confirmed by Assist Finance's auditors Ernst & Young.

All other assets of Assist Finance were sold during the course of the Moratorium with the full consent of Assist Finance's Trustee. This was also been confirmed by Assist Finance's auditors Ernst & Young.

"Every cent has been independently accounted for.

In summary from original estimates there was a 35 % reduction in loan collections and an 18% reduction in sale value of the Mortgage Fund.

In addition, there was a 39% increase in costs primarily attributed to Trustee Fees, compliance and Consultant costs.

Unsecured investors have been provided with detailed financial reports including a final report itemising where every cent went and a comparison between the final performance of the Moratorium and original estimates.

All of this information has been reviewed by Assist Finance's Trustee, the Trustee's independent consultant, a senior Chartered Accountant, ASIC and fully audited by Ernst & Young.

 

The Moratorium is now complete in accordance with its terms" said Mr Jason Di Iulio.

What is the current status of Assist Finance ?

On 27 July, 2017 Assist Finances' independent Trustee, which acts on behalf of all unsecured investors, formally acknowledged that the terms of the Moratorium were properly performed by Assist Finance and that all parties to the Moratorium, including the Directors of Assist Finance, had fulfilled their all of their obligations without exception.

The Trustee has also acknowledged that no debt exists between it and Assist Finance and has accordingly forever withdrawn all claims against Assist Finance and its Directors.

Assist Finance is now non-trading.

"Assist Finance has twice been vindicated by the Federal Court. The Trustee has also acknowledged that Assist Finance and its Directors fulfilled all of its obligations without exception and that, further, no debt at all exists between it, Noteholders and Assist Finance. It is also without dispute that all monies were independently accounted for and, accordingly, this matter is now finalized" said Mr Jason Di Iulio