Advice and product sales needs distinction



The product failures and consumer losses associated with agribusiness managed investment schemes (MIS) are the result of inadequate leadership, the Financial Planning Association of Australia (FPA) believes.
Welcoming the Senate Economics References Committee report into failed agribusiness MIS, FPA chief executive, Dante De Gori, said there was insufficient regulation governing the meaning of ‘general advice', and the need to legislate a clear distinction between financial advice and product sales.
"The FPA recognises that thousands of Australian investors suffered when the agribusiness investment schemes collapsed. Unfortunately, many investors did not fully understand what they were buying, and believed that they had been recommended an investment which took into account their personal circumstances, when this wasn't in fact the case," De Gori said.
"Many FPA members have said they [agribusiness MIS] are so difficult to understand and justify that financial planners avoid them, and their licensees do not include them on their approved product lists. That's why the distinction between product sales and financial advice must be made clear."
De Gori noted while reform of agribusiness MIS was essential, it should be part of a wider, comprehensive reform of the Australian financial services system as a whole.
"The FOFA [future of financial advice] reforms are a positive step, but the fact is that many of the product failures and consumer losses associated with agribusiness MIS are the consequence of inadequate leadership in responding to the financialisation of Australian society," he said.
Recommended for you
Two law firms have highlighted licensees’ responsibility to ensure they have sufficient cyber security measures in light of the enforcement action against Fortnum Private Wealth.
A former director has pleaded guilty to providing financial product advice without holding an AFSL which saw almost $2 million transferred to him.
Commonwealth Private Limited, a subsidiary of Commonwealth Bank of Australia, has launched a wholesale offering with the help of JPMAM.
Shaw and Partners’ new national head of private wealth believes the biggest challenge for financial advisers right now is being able to deliver efficient advice delivery amid a complex regulatory environment and growing investment universe.