Investor losses in Trio Capital could have been avoided if FOFA had been in place, a Labor MP has claimed, criticising the Abbott government’s decision to make amendments to the legislation.
In a submission to the Senate inquiry into ASIC, Stephen Jones MP, federal member for Throsby on the NSW South Coast, has defended the FOFA legislation in its current form, arguing the laws may have assisted victims of the Trio Collapse – many of whom are his constituents.
“As you would be aware, the Labor government introduced tough new laws known as the ‘Future of Financial Advice’ that banned kick-backs for financial advisers and imposed a new duty for financial advisers to put clients' interests first,” Mr Jones wrote.
“I believe that if these laws had been put in place before 2007, many of the worst examples of the losses in Trio may never have occurred. Given the terrible experience of Illawarra constituents, I am deeply concerned at reports that the Abbott Government now plans to axe these reforms.”
Mr Jones also argued that more responsibility for investor losses related to Trio should be taken by financial advisers, singling out former Wollongong-based financial adviser Ross Tarrant.
“As a financial adviser, Mr Ross Tarrant would have known that there would be no compensation available to these SMSF investors under part 23,” Mr Jones wrote. “That financial adviser received significant commissions for encouraging these investors to do this.”
However, former Trio investor and secretary of the Victims of Financial Fraud (VOFF) organisation John Telford recently told ifa that Mr Tarrant’s former clients do not blame him for the losses sustained.
“Somehow Ross Tarrant has become the scapegoat and the focus became upon him,” Mr Telford said, claiming the blame should lie with the relevant regulatory authorities.
Mr Telford has also issued a formal submission to the Senate inquiry, in which he argues that “weaknesses in the financial system” led to the investor losses in Trio and that former Labor financial services minister Bill Shorten had made “disingenuous, defamatory and misleading statements and comments” about Trio victims.
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