Agribusiness Senate Report: FPA supports recommendations, calls for further comprehensive reform
The Financial Planning Association of Australia (FPA) has welcomed the recommendations of the Senate Economics References Committee report into failed agribusiness managed investment schemes (MIS), particularly those around improving consumer protection.
Dante De Gori CFP®, CEO of the FPA, said he was pleased that the recommendations reflect the FPA’s submission to the Senate inquiry into forestry managed investment schemes (FMIS) in December 2014, as well as recommendations made by the FPA as part of the Financial Systems Inquiry (FSI). These recommendations sought to highlight insufficient regulation governing the meaning of term ‘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.
“Agribusiness MIS are highly complex products. Indeed many FPA members have said they 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,” he said.
Mr De Gori went on to acknowledge that the reform of agribusiness MIS, while essential, should be part of a wider, comprehensive reform of the Australian financial services system as a whole.
“The FOFA 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.”
Mr De Gori concluded by saying that the FPA has been working intensively with the Government, regulators and the industry in order to improve the standards of advice provided to consumers. These include its higher levels of planner education, guiding financial planners on delivering best practice advice, and initiatives to improve consumers’ financial literacy.