Margin move

THE Federal Government has released new laws to regulate margin lending following the collapse of investment companies such as MFS and Storm Financial.

The move follows margin loans that resulted in ‘mum and dad investors’ losing their homes. Minister for Superannuation and Corporate Law Nick Sherry says margin lending would be added to the Corporations Act as a financial product.

Margin lending is not currently regulated in Australia. The initiative is part of a plan to modernise Australia’s financial regulation for the 21st century.

"There have been several high-profile examples of margin lending arrangements that have caused financial pain to a wide range of Australians," says Sherry.

Lenders will first of all be required to hold an Australian Financial Services Licence and work under the regulations of the Australian Securities and Investments Commission.