Travel News

Sterling First victims fall through gaps for social security support, draft compensation scheme

Retirees ripped off of their life savings by a rent-for-life scam have been denied federal government financial aid because of the way it classified the highly complex “investment” scheme, a parliamentary inquiry has heard.

Seniors duped by the Sterling First scheme sold their homes to free locked-up capital, then moved into rental properties with the expectation they would stay there for the rest of their life.

It was marketed as pairing up “smart property investors that are looking to get a better rental return with retirees that are looking to sign a long-term lease”.

But the Sterling Group and Sterling Income Trust went into liquidation in 2019 – allegedly after trading while insolvent for months – and many of the lessees were forced out of the properties.


After Department of Social Services pensions, housing and homelessness group manager Troy Sloan testified at the inquiry on Thursday, Senator Paul Scarr said he was “gravely concerned”.

Camera IconSterling First victim Alan Fardoe told the inquiry on Tuesday that seeking help from the Australian Financial Complaints Authority had been a waste of time. He is pictured with Cath Dall, whose mother was duped by the scheme. via NCA NewsWire Credit: Supplied

“Some of the victims of the Sterling Income Trust debacle and Silverlink debacle have been denied social security support and rent assistance, because of the way in which these extraordinarily complex arrangements have been interpreted by the federal government,” Senator Scarr said.

“In making that statement, I am not in any way being critical of the Social Security Department, Centrelink …

“But I’m very concerned these people have sold their house, looked to enter into a long-term residential arrangement, in effect accelerated the payment of rent and that’s been considered an ‘investment’, in inverted commas.


“There are victims of this collapse who not only have lost all the equity in their home, but when they needed social security support and rent assistance, have been prejudiced because of the complexity of these arrangements.

“They didn’t see themselves as participating in a managed investment scheme: they saw themselves as securing their future occupational rights and commercially, that was really the intention.”

He said “it could well be” that the department needed to reassess their eligibility for support.

“It is something the department needs to reflect on.”

Some of the housing options Sterling spruiked.
Camera IconSome of the housing options Sterling spruiked. Credit: Supplied

Senator Jordon Steele-John asked Mr Sloan to provide on notice how many victims were denied help and if ministerial discretion could be used.

“As Senator Scarr pointed out, putting the technicalities of this particular structure aside, people believed that they were investing funds to secure themselves long-term accommodation and then that disappeared,” Senator Steel-John said.

Mr Sloan replied: “More broadly there is not ministerial discretion in the social security system.

“But … we have special hardship provisions where if people are in hardship and they can’t access certain assets because of things like liquidation, we can look through those or ignore those ‘stranded assets’ … to then work out if they’re eligible for a pension or not.”

The definition of the scam as a managed investment scheme also means victims have been excluded from the long-awaited “compensation scheme of last resort” before parliament, which was a recommendation of the banking royal commission.

AFCA chief operating officer Justin Untersteiner and senior legal manager Rosanne Rose testifying at the Sterling First parliamentary inquiry.
Camera IconAFCA chief operating officer Justin Untersteiner and senior legal manager Rosanne Rose testifying at the Sterling First parliamentary inquiry. Credit: Supplied

Under the draft Bill, due to be debated in the Senate next week, limited compensation will be available where a determination issued by the Australian Financial Complaints Authority (AFCA) remains unpaid.

But managed investment schemes are not within the scope and only some kinds of insolvent companies are covered.

“I know it doesn’t help these consumers but … the reality is the vast majority of our complaints aren’t against insolvent firms and we are able to deal with the vast majority of our complaints. Unfortunately, though, this is a situation where we can be limited,” ACFA chief operating officer Justin Untersteiner testified.

If the Bill was amended to include managed investment schemes, ACFA would be able to consider complaints against certain Sterling Group companies that fall within its jurisdiction that were lodged after November 1, 2018, he said.

Latest Travel News

Travel Guides

Travel Guides Buzz has breaking travel news, travel hotels, America travel guides, travel photos, latest travel news, Asia travel guides, Europe travel guides, Australia travel guides and all the trending buzz you’ll want to share with your friends. Copyright Travel Guides Buzz.

Related Articles

Back to top button