After Westpoint and Fincorp, we now have Australian Capital Reserve. Three high-risk, high-yield debenture companies have failed within 18 months putting at risk nearly $1 billion in savings belong to 20,000 naive investors.
And the most distressing thing about the latest property company collapse is that there are yet more to come.
The most annoying thing though is that the Australian Securities and Investments Commission had been trying to warn people about ACR and similar high-risk gambles for years.
The problem is that the average punter doesn't troll through the ASIC web site for warnings or even Google a company's name before handing over his or her savings. Instead, they read advertisements in newspapers and listen to them on radio and television as these dubious ventures that are painted as secure.
And they are sold pups by "financial advisors" who have no excuse for not knowing about ASIC's warnings, but are perhaps blinded by the commissions they receive.
It is a most unequal battle - the rich advertising budgets of dubious real estate developers versus the limited publicity ASIC attempts to give the issue.
The then deputy chairman of ASIC, Jeremy Cooper, made it pretty plain what he thought:
"High-yield debentures are typically a risky investment, and there is no guarantee that investors will get their money back," he said.
And the release named four companies that were the subject of either final or interim stop orders during its surveillance campaign: Fincorp Investments Ltd, Australian Capital Reserve Ltd, Hargraves Secured Investments Ltd and Victorian Finance & Leasing Ltd.
Presumably the people who've lost money through Fincorp and ACR never saw the release or were not aware the companies had had some bother with the watchdog.
In my opinion, if a company cops a stop order from ASIC, you can probably find a better place to put your money.
The big problem with outfits advertising fat interest rates is that they give the impression that they are secure when they're not. I interviewed Simon Ibbetson, Standard and Poors' director of investment consulting about this for Eureka Report. S&P is a ratings agency that grades the debt securities of major companies - not the "z-grade" debentures of the likes of ACR.
"We see in the press every day adverts for very speculative type of operations that are paying high commissions to financial planners and brokers and we just wonder where those schemes are going to end up," said Ibbetson.
"They seem to be very high risk to me. Unfortunately they're not sold as high risk. They're sold as regular income type plans. They use very secure sounding names, "Permanent" and "Capital Reserve" and they sound like they're very secure organizations but in fact they're very high risk."
And it's not just mobs like ACR - front organisations for real estate developers - that worry Ibbetson. He believes more of that ilk will fall over, but he's also increasingly concerned about some of the outfits flogging low-doc or no-doc loans, some of them lending more than the value of the property with no evidence of the ability to service and without mortgage insurance, but with high up-front commissions for mortgage brokers. It's a recipe for failure.
The bottom line remains the same - the higher the promised return, the greater the risk. And there is an army of sharp operators out there trying to take your money without informing you of the risk involved.
- Michael Pascoe