Consumers warned against dodgy investments
Jo-Anne Bloch
Designed to help consumers identify dodgy investment schemes, the Australian Taxation Office’s (ATO) Don’t Take the Bait campaign has been fully endorsed by the Financial Planning Association (FPA).
Don’t Take the Bait is an ATO brochure that advises Australians of the importance in seeking independent advice and checking for an ATO product ruling before investing.
It also warns against promises of high investment returns, generous tax breaks and arrangements that put money in an offshore tax haven.
The brochure reminds investors that if they don’t investigate they run the risk of having to pay back any missing tax, plus interest and penalties.
“Some of the promises these schemes make are just ridiculous to those in the financial services industry, but for Australians they are a trap pure and simple,” FPA chief executive officer Jo-Anne Bloch said.
The ATO brochure provides a list of typical phrases used to gain an investor’s interest in suspicious investment schemes, such as ‘There are no risks; we guarantee returns’, and ‘You don’t need credit checks or asset checks, we’ll lend you the money’.
In addition, it provides consumers with some questions they should ask before committing themselves to investment schemes, including whether or not the salesperson promoting the product works for a licensed business and whether or not the investment scheme provided a Product Disclosure Statement or prospectus.
“Everyone wants to build their wealth and achieve their financial goals, but people have to be careful. They could lose all their money and have to sell their home, put off retirement or find themselves bankrupt.
“Don’t forget, if it looks too good to be true, it probably is”.
Before signing up to complex investments that they don’t fully understand, Bloch suggests people seek financial advice from a member of the FPA.
“FPA members are required to sign up to ethical and professional standards. They are bound by our conflicts of interest principles and subject to our compliance regime,” she said.
“Getting advice from a FPA member, particularly a certified financial planner (the gold standard), is the first step towards taking control of your financial future.”
Recommended for you
The new financial year has got off to a strong start in adviser gains, helped by new entrants, after heavy losses sustained in June.
Michael McCorry, chief investment officer at BlackRock Australia, has detailed how investors are reconsidering their 60/40 portfolios as macro uncertainty highlight the benefits of liquid alternatives.
Having reset its market focus to high-net-worth advisers, Praemium’s administration solution has been selected by Bell Potter in a deal that increases the platform's funds under administration by $6 billion.
High transition rates from financial advisers have helped Netwealth’s funds under administration rise by $3.7 billion in the fourth quarter of FY25.
