Many Great Southern 'advisers' were authorised reps of accountants

Many advisers licensed to sell Great Southern products were in fact authorised representative of accountancy firms that were licensed solely by the agribusiness company, according to Ferguson Betts director Rob Ferguson.

He said a search of the Australian Securities and Investments Commission (ASIC) website under Great Southern had revealed that advisers listed on the site were invariably authorised representatives of accountancy firms.

“I don’t believe these were advisers in the sense that they were giving clients a holistic planning service, or that providing financial advice was their core business."

Instead, he said he believes “a lot of these guys do tax returns as their core business and have been providing this advice as a side line”.

Ferguson said he was prepared to acknowledge that “plenty of fully-licensed advisers have sold Great Southern products to their clients".

“However, it’s disheartening that fully-licensed advisers are going to be lumped together with people that were licensed by Great Southern specifically to sell their products.”

He said it needs to be asked what sort of advice these clients were being given, and whether they knew that their accountants were licensed through ASIC only to provide financial advice to Great Southern.

He called on ASIC to explain why it had expanded the licence conditions of these Great Southern licensees in 2007 to include providing advice on the managed investment scheme (MIS) component.

In 2004 these advisers were licensed by ASIC only to give advice on the Great Southern agribusiness, not on MIS schemes, he said.

“More importantly, the licence didn’t include superannuation, which would have been the obvious alternative to a tax-driven investment scheme for clients.

“This means that before 2007 someone using this licence had to be very careful of what advice they gave, because they were only allowed to give limited advice, but in 2007 ASIC expanded it to basically a full licence.”