A collapsed property investment scheme which cost elderly Australians their homes and life savings has been referred for possible criminal charges.
The Australian Securities and Investments Commission has handed information about Sterling Income Trust to the Commonwealth Director of Public Prosecutions to weigh up criminal charges.
Former ASIC investigator Niall Coburn told a Senate inquiry on Tuesday it was "incredible" the corporate cop took so long to start investigating and the delay allowed the scheme to "spread its tentacles".
The scheme lured West Australian investors into signing long-term tenancy agreements, with returns from a lump-sum investment used to pay rent.
Senators are scrutinising ASIC's oversight and looking at what is needed to prevent it from happening again as well as broader laws for financial misconduct victims.
Cath Dall's mother, a disability pensioner, was among those stung by Sterling's collapse in 2019 after investing more than $165,000.
Ms Dall told senators the fact the directors were able to start Sterling was a failure on ASIC's behalf.
Then-Sterling directors Raymond Jones and Simon Bell had between them previously been directors, alternate directors or secretaries of a combined 211 companies.
Ms Dall said Mr Jones had resigned from seven different companies each before they collapsed.
"It shows a pattern of behaviour where he is resigning his role of responsibility so he can potentially ... not be held accountable for the collapse of the company," she said.
Alan Fardoe invested around $120,000. He told the inquiry about "so many red flags" and said it was "unbelievable" Sterling had not been stopped before it could start.
ASIC was criticised for failing to act immediately after West Australian regulators flagged Sterling in March 2017.
A formal investigation did not start until May 2018.
ASIC chair Joseph Longo acknowledged people wanted it to move faster, but said due process had to be followed.
The regulator also had to make "difficult choices" about what misconduct it put under the microscope.
Mr Longo maintained ASIC's judgments made regarding Sterling were reasonable.
Liberal senator Paul Scarr wanted to know why a four-year industry ban against a different Sterling director earlier this year wasn't longer.
The senator also wanted to know how future investors could be made aware of the previous malpractice.
"In big red type it should say one of the directors involved in that was banned," he said.