In a submission to the Senate inquiry into the performance of ASIC, Mark Hoddinott of Hoddninott Consulting, a financial adviser licensed by Premium Wealth Management and former president of CPA Australia, argued gaps in the regulatory system led to nefarious activity in the aftermath of the collapse of Willmott.
“In my role as a financial planner from the period 2003 to 2010 I recommended to various clients of my practice to invest into the timber industry in Australia via Willmott Forests’ managed investment schemes,” the submission stated. “These were sound financial investments, approved by the ATO for tax incentives and supported by independent research.”
Mr Hoddinott argues that following the scheme’s failure and entry into liquidation in 2010, there was a “blatant transfer of wealth from mums and dads to predatory corporate raiders and complicit liquidators who acted in total conflict of their duty of care”.
However, the adviser – who explains he was also a shareholder in Wilmott – does not blame these aforementioned stakeholders but the regulatory system overseeing managed investment schemes – and ASIC in particular.
Mr Hoddinott said the fact there is no requirement for responsible entities of managed investment schemes to be independent of scheme managers and promoters is a “core flaw” in Australian corporations law.
ASIC should respond to concerns from investors, ensure matters like Willmott are “monitored to ensure investor rights are protected” and ensure “flaws in the legislation are remediated” the submission stated.
If you consider Blue gun plantations a great success you are mistaken. When the BDT(Bone Dry Ton) chip price landed at the wharf is consistently less than the cost of cartage and processing I’m not sure how this counts as success. Paying twice to three time the going price for land to plant trees that when processed don’t cover the cost of production and processing let alone land acquisition costs it never stacked up regardless of who was doing it. Some Advisers(mostly Accountants) were blinded by the spin and are now crying in their bear and trying to deflect blame.
No doubt like in most professions there are some advisors who have acted without due care. The fact remains that these were sound investments and continue to be so – the investments didn’t fail, just the manager of the schemes yet the investors unfairly pay the ultimate price aided by legal and corporate vultures just waiting to pounce on the vulnerable. For the sake of balance the advisor fees on these investments when spread over their 25 year life amount to approx 0.4% pa. Additionally the very bank that leant most of the money to investors was the same bank that brought the investments down. Greed Greed Greed and an indifference to the interests of Mum’s and Dads.
OK tax driven MIS products were always going to be a disaster, but we absolutely agree that there should be separation with all funds of all types. As we have seen with the shenanigans perpetrated by Rural Funds Management in recent times The conflict of interest when manager and RE are one and the same leaves investors dangerously exposed.
I wonder how many advisers ponder the huge up front commissions they received and the ongoing trails from loans arranged on these products before seeking to blame someone else other than the person recommending the product to the end client in the first place. I am sure they weren’t complaining getting the nice juicy fees upfront?
The biggest ‘gap’ here was that between the advisers ears. Gullible and ignorant of the underlying nature of the investments. It commendable to try and pass the buck..not.