FPA claims ‘gatekeepers’ part of agribusiness failures
The Financial Planning Association (FPA) has questioned the role of research houses, responsible managers and product issuers in the collapses of forestry managed investment schemes (FMIS) stating it had become easier to blame planners than examine the quality of products or research.
In its submission to the Senate Economics References Committee inquiry into the structure and development of forestry managed investment schemes the FPA stated that in past FMIS collapses "gatekeeper failures within research houses, AFS licensees, responsible managers, and product issuers have been understated in favour of blaming product distributors and financial planners".
The FPA stated this was the result of the creation of a disclosure-oriented regulatory focused on financial planners but which explicitly excluded financial product quality and research quality from any form of scrutiny.
The submission stated that each stakeholder influenced the decisions by consumers to invest FMIS related financial products and that the Australian Securities and Investments Commission should therefore be granted legislative power to hold them accountable for their gatekeeper role
The FPA referenced the Financial System Inquiry (FSI) Final Report claiming that it stated "that product regulation and product issuer regulation need to be more carefully considered in order that those entities bear the appropriate responsibility for a fair, safe, and efficient financial services system".
"We maintain that many other gatekeepers, such as research houses and AFS licensees, have also failed their obligations. Many retail investors have suffered as a result of faulty research regarding fundamentally flawed forestry MIS. We urge the Senate Committee to examine the involvement of these critical gatekeepers.
The FPA also called for the overall regulation of the FMIS sector to be tied back to the Senate Review into the performance of ASIC, the FOFA regime, the FSIand the ongoing Senate Economics References Committee inquiry into the scrutiny of financial advice.
"At a fundamental level, the product failures and massive consumer losses associated with FMIS, agribusiness MIS, and many other financial product scandals are the consequence of inadequate leadership in responding to the financialisation of Australian society," the FPA stated in its cover letter to its submission. "The FPA's view is that reforms for FMIS have to be connected to comprehensive law reform and policy development regarding the Australian financial services system."
AUTHOR
Jason Spits
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