Report

Agribusiness managed investment schemes

Bitter harvest

11 March 2016

© Commonwealth of Australia 2016
ISBN 978-1-76010-390-3

View the report as a single document - (PDF 3545KB)


View the report as separate downloadable parts:

Senate Economics References Committee (PDF 21KB)
Abbreviations (PDF 19KB)
Preamble - Explanation—terms of reference (PDF 11KB)
Executive summary - Findings and recommendations (PDF 97KB)

Tax incentive
Geared investments
Financial advisers and trust
Product producers
Liquidation
Future of agribusiness MIS
Enforcement

Chapter 1 - Introduction (PDF 302KB)

Conduct of inquiry
Terms of Reference
Background to inquiry
Submissions
Confidential material
Scope and structure of report
Acknowledgements

Chapter 2 - Managed investment schemes (PDF 199KB)

Structure
Agribusiness MIS
Figure 2.1: A typical MIS structure
Forestry MIS
Horticultural MIS
Agribusiness MIS collapses
Conclusion

Chapter 3 - Human cost (PDF 40KB)

Personal accounts

Chapter 4 - Taxation concessions (PDF 114KB)

Tax benefits as driver of investment
Significance of ATO rulings

Chapter 5 - Geared investment (PDF 165KB)

History of predatory lending
Borrowing for annual fees
Approval process—loan application forms
Irresponsible lending
Pressure selling

Chapter 6 - Retail investors (PDF 71KB)

Behavioural economics
Trust

Chapter 7 - Financial advice and advisers (PDF 126KB)

Agribusiness and financial advice
Deficiencies in advice
Licensing requirements
Inappropriate advice
Commissions
Recent legislation
Holding financial advisers to account
Role of accountants
Conclusion

Chapter 8 - Education and culture (PDF 100KB)

Financial literacy
Future of Financial Advice Reforms
Financial advisers—education and training
Culture

Chapter 9 - Product developers and promoters (PDF 160KB)

Informed decision-making
Long standing concerns about disclosure
Prospectuses and product disclosure statements
Misunderstandings
Agribusiness PDS—scope for improvement
Context of information—oral advice, wealth seminars
Conclusion

Chapter 10 - General advice (PDF 106KB)

Regulations regarding the provision of general advice
Referral networks
Gatekeepers—research houses
Conclusion

Chapter 11 - Role of banks (PDF 175KB)

Banks and responsible lending
ANZ
Hardship provisions
Bendigo Bank
Pattern of poor lending practices
New credit laws

Chapter 12 - Class actions and legal advice to investors (PDF 48KB)

Compound interest and mounting debt
Class action—advice not to repay

Chapter 13 - Business model — commercial viability (PDF 177KB)

Reasons for collapses
Schemes' performance
Poor management
Ponzi-like schemes
Conclusion

Chapter 14 - Unsafe products (PDF 106KB)

Promoting and selling complex financial products
Suitability for retail investors
Product and product issuer regulation
Conclusion

Chapter 15 - Liquidation (PDF 118KB)

Complex arrangements
MIS in external administration
Replacement RE
Network of agreements and competing interests
Call for reform
Conclusion

Chapter 16 - Environmental and farming community concerns (PDF 1521KB)

Environmental and social consequences
Viability of schemes after liquidation and sale
Reforming the system
Conclusion

Chapter 17 - Compensation (PDF 80KB)

Avenues for recompense
Advisers—professional indemnity insurance and bankruptcy
Compensation scheme

Chapter 18 - Conclusion (PDF 93KB)

ASIC
Criticism of ASIC
Enforcement
Committee findings and recommendations

Senator Nick Xenophon—Additional Comments (PDF 35KB)

Government has been MISsing In Action: Time for a Compensation Scheme for MIS Victims
Recommendation

Australian Greens—Dissenting Report (PDF 26KB)

Investors and incentives
Promoters and producers

Appendix 1 - Submissions received (PDF 19KB)
Appendix 2 - Public Hearings and Witnesses (PDF 12KB)
Appendix 3 - CAMAC Managed Investment Schemes (PDF 29KB)

Proposed key legislative reforms
Changing the RE of a viable scheme
Restructuring a financially stressed scheme
Winding up a scheme
Other matters

Committee Secretariat contact:

Senate Standing Committees on Economics
PO Box 6100
Parliament House
Canberra ACT 2600

Phone: +61 2 6277 3540
Fax: +61 2 6277 5719
economics.sen@aph.gov.au