A former Melbourne-based builders' warranty provider will be sentenced on Friday after pleading guilty to carrying on a financial services business without the necessary licence and 15 counts of dishonest conduct in relation to financial products.

James Scott was a director of Homesafe Equities, which issued builders' warranty bonds in Victoria between June 2003 and March 2004. The bonds were insurance products that required Homesafe to hold an Australian financial services licence.

Neither Mr Scott nor Homesafe held one. Homesafe contended it was the manager of a “captive pool” and the insurance it provided by way of the bonds was fully reinsured.

The Australian Securities and Investments Commission said there was no pool set aside to pay any claims and full reinsurance was not in place.