Former Melbourne-based builders' warranty provider James Scott has pleaded guilty in the County Court to carrying on a financial services business without holding an Australian financial services licence and 15 counts of dishonest conduct in relation to financial products.

Mr Scott was a director of Homesafe Equities in Mentone, a company that issued builders' warranty bonds in Victoria between June 2003 and March 2004.

Neither Mr Scott nor Homesafe held a licence. Homesafe contended that it was the manager of a “captive pool” and that the insurance it provided was fully reinsured.

The Australian Securities and Investments Commission (ASIC) said builders who obtained the insurance certificates did not know there was no money set aside in the pool to pay claims, and that full reinsurance was not in place in respect of any claims that might have been made.

Homesafe was placed into liquidation in August 13 after ASIC told the Victorian Supreme Court the bonds issued by the company would not pay any claims.

Mr Scott will reappear in the County Court on Friday for sentencing.