Government urged to allow Asic to decide claims against itself after investors left in limbo

The former speaker Tony Smith has urged Josh Frydenberg to allow the corporate regulator to decide claims against itself, after investors had no one to resolve their bid for compensation over a failed retirement village empire.

The issue was brought to the parliamentary joint committee on corporations and financial services by the Labor MP Julian Hill after Guardian Australia revealed that investors seeking $200m in compensation from Asic over the collapse of retirement village group Prime Trust were unable to get either Asic or Treasury to decide their claim.

But any change to the rules would not be retrospective, leaving the Prime Trust investors in the hands of the treasurer.

The investors, represented by the Prime Trust Action Group, lodged their CDDA claim with Asic more than three years ago but it has not progressed due to the legal catch-22.

They claimed Asic erred because it granted a financial services license to the company which controlled Prime Trust, Australian Property Custodian Holdings.

Prime Trust collapsed in 2010, taking with it $550m invested by more than 9,000 unit holders and sparking years of litigation involving Lewski, other directors, investors and the corporate regulator.

In October 2019 the full federal court banned Lewski from running a company for 15 years and fined him $230,000.