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.
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