Call to shut down agribusiness MIS to avoid poor advice
All forms of agribusiness managed investment schemes (MIS) should be shut down and all government support for the schemes removed to avoid further losses from the public purse and inappropriate advice from accountants and financial planners.
In a submission to the Senate Economics References Committee inquiry into the structure and development of forestry managed investment schemes Agribusiness Valuations Australia principal Samuel Paton savaged accountants and financial planners claiming few knew anything about agribusiness and were negligent in offering in touting the schemes.
He stated that the promotion of these schemes by financial planners and accountants, in exchange for commissions, was a clear conflict of interest and if this behaviour had been restricted none of the schemes would have ever raised any funds from members of the public.
“Can you imagine that if it had been prohibited for example, for a promoter to engage and pay an advisory research house to rate their product, and then pass this information on to a financial planner with a further inducement of a 10 per cent commission? I personally believe that not one of these schemes would have ever got off the ground,” Paton said.
“You could count on one mangled hand the number of financial planners who would know anything about agribusiness, let alone the negligent nature of touting these schemes, which promised either robust annuity incomes or end of rotation lump sum windfalls.”
“The whole process of course was supply driven and not demand driven, so again it was operating in a policy vacuum totally devoid from the real world. It simply defied all the laws of economics.”
Paton was also highly critical of the lack of compliance and government oversight given to agribusiness MIS with the promotion of the schemes “never subject to any independent government audit as to the veracity of the claims that were being made in their promotional literature and their ASIC and ATO sanctioned PDS’s”.
He also stated that scheme promoters were not questioned and were able offer upfront deductibility of 99 per cent without any form of government research to establish a clear public benefits test while actually promoted these schemes to build a forestry and agribusiness sector.
“Governments should keep out of this, and particularly not artificially manipulate the Tax Act to facilitate one particular class of investor’s deductibility which is not available to the wider primary producer community in any event,” Paton said.
Recommended for you
Australia’s largest licensee has seen the biggest number of adviser losses over the past week, while the expected wave of new entrants has boosted overall adviser numbers.
Iress has increased its forecast adjusted EBITDA by $5 million for the 2023/24 financial year in light of the sale of its platform business to Praemium and hinted at a return to dividend payments.
With just 30 per cent of Australians knowing their superannuation balance to the nearest $1,000, Findex has emphasised the role of financial advice in addressing the critical super knowledge gap.
New Insignia Financial CEO Scott Hartley has detailed the impact of the Godfrey Pembroke exit and the progress in resetting its financial advice model on its latest quarterly results.
