There is little to differentiate quality advice from licensed representatives who are promoting one product in the current regulatory regime, the FPA tells a government inquiry.
The FPA has called for an investigation into the current licensing arrangements used by product promoters of agribusiness MIS schemes.
In its submission to the parliamentary joint committee on corporations and financial services, the FPA called for greater scrutiny to be applied to holders of an Australian Financial Services Licence (AFSL) who are also authorised representatives of agribusiness MIS schemes.
"A key difference between agribusiness MIS and other financial products is the existence of a dedicated sales network to support sales of investments in Great Southern and Timbercorp, through which a significant proportion of sales were achieved," the submission said.
"As a profession we are not only concerned with legally compliant advice, but with quality advice that significantly enhances client outcomes.
"We must question the quality of advice when a representative is limited to recommending only one product."
The FPA said people were unable to distinguish between a planner who provides "rounded advice" on a range of products that suit the client and a representative who is limited to recommending only one product.
"A regulatory model that allows licensing arrangements for the use of authorised representatives by product AFSLs should be further investigated as to their appropriateness," it said.
The association also questioned the role of the regulatory system in encouraging investment in theses schemes through the provision of tax benefits which allowed them to be listed on the Australian Securities Exchange, be approved by the Australian Taxation Office and be ASIC regulated.
"Given these overlaying regulatory structures, it is unsurprising that these assets were considered to be appropriate vehicles for investors' funds," the FPA said.
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Many in the industry would have been bogged down in submissions given the plethora of government reviews. Next year it will be the government's turn to act on the reviews. ... read more »
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