CANBERRA, May 7 (Reuters) - Australia plans to tighten laws governing its A$30 billion ($24 billion) margin-lending industry after several high-profile investment schemes collapsed, sending scores of retail investors into financial ruin.
Corporate Law Minister Nick Sherry, in unveiling the planned changes on Thursday, said margin-lenders would in future have to alert investors of the need to top up their accounts by e-mail or text message before moving to sell their shares.
Margin-lending allows investors to gear up share portfolios but they can be required to top up their accounts, via payments known as margin calls, when share prices fall. If they do not meet margin calls, the lender can sell their shares.
As share prices have tumbled over the past 18 months, margin calls have wiped out some investors amid criticism that some mainstream lenders have allowed them to take on too much debt.
"There have been several high-profile examples of margin-lending arrangements that have caused financial pain to a wide range of Australians," Sherry added.
Under the proposed changes, lenders would also be required to meet responsible-lending rules and offer cheap dispute-resolution processes, Sherry said in a statement.
Melbourne stockbroking firm Opes Prime was placed in the hands of receivers in March last year after a number of trading irregularities emerged and hefty margin loans were called in. Another lender, Storm Financial, which claimed to have more than 13,000 clients and A$4.5 billion under management at its peak, collapsed in January after being unable to repay a loan of around A$10 million from its main lender, the Commonwealth Bank. ($1=1.346 Australian Dollars) (Reporting by Rob Taylor; Editing by Mark Bendeich)