The Australian Securities and Investments Commission (ASIC) has commenced action in the Victorian Supreme Court to appoint a provisional liquidator to Homesafe Equities and Home and Renovators Group (HRG), which have provided builders’ warranty and financial guarantee bonds.

The regulator alleges Homesafe and HRG breached the Corporations Act and the Insurance Act by issuing insurance and financial products without the necessary authority or licence. It also alleges HRG is insolvent. The case will be heard on Friday.

Over the past year about 790 bonds were issued to builders in Victoria by Homesafe. ASIC says it continued issuing bonds after being told by the Australian Prudential Regulation Authority to stop doing so. The regulator was concerned Homesafe may have had insufficient assets to meet claims.

Builders in Victoria are required by the State Building Act to be covered by builders’ warranty insurance. The policy covers property owners against non-completion of work and structural defects for a specified period, as well as where the builder dies, disappears or becomes insolvent.