TheAustralian Securities and Investments Commission(ASIC) has found there are low levels of compliance by a number of promoters of tax driven mass-marketed agri-business schemes after a nationwide review of the sector.
ASIC found the low levels of compliance were in the areas of legally required record keeping and “there were difficulties in assessing whether sufficient capital was being maintained and contributed to the activities of the scheme”.
The regulator also found the responsible entities for the schemes outsourced important functions on a frequent basis and made use of inexperienced managers.
ASIC financial services regulation executive director Ian Johnston says the review exposed a number of possible breaches of the law and that the regulator was prepared to act on these breaches.
Johnston says the review also highlighted a number of areas for reform in current policies and the law, and would take this to the industry and Commonwealth Treasury for further discussion.
The results of the review also examine the relationship between high commissions received by financial advisers and the provision of inappropriate or misleading advice encouraging investors to invest in such schemes.
“ASIC found that there was often poor disclosure of commissions and there were a number of instances of people being put into these schemes as a result of poor advice,” Johnston says.
The review was carried out last year and involved a survey of 92 offer documents with respect to 131 managed investments schemes operated by 103 licensed responsible entities.
ASIC also undertook a number of surveillance field visits to promoters and advisers of such schemes, and reviewed 301 client adviser files and conducted interviews with more than 100 investors.
