The present government's "dismantling" of the FOFA reforms will see an increase in the number of fraudulent financial advisers, claims shadow financial services minister Bernie Ripoll.
Speaking to ifa sister publication The Adviser, Mr Ripoll said the original FOFA legislation was designed to protect consumers from fraudulent advisers.
Mr Ripoll chaired the 2009 Parliamentary Joint Committee on Corporations and Financial Services that culminated in FOFA.
He said the government’s decision to “dismantle” the FOFA legislation means consumers are no longer protected.
“It is completely at odds with what the industry is saying, completely at odds with what consumers need and want, and it is completely at odds with problems and issues we see within the financial services industry including [fraud],” Mr Ripoll said.
“It doesn’t surprise me that there is more activity in that area of people fraudulently representing themselves and more problems arising out of the financial services sector.
“To have someone who is not qualified and [pretending] to be somebody they are not, is a really big problem,” he said. “So what the government has done is just bad for consumers and it is bad for advisers themselves.”
Mr Ripoll also said the government must bring consumer protection to the “core of their legislative platform” to assist in restoring trust in the advice industry.
“The bottom line is, if you are a consumer you would be a little bit more worried and concerned because frankly the reputation of financial advisers unfortunately – because of some bad behaviour and bad practices particularly in the banks – means there is no trust in the industry,” Mr Ripoll said.
“To restore trust you have got to make sure [they] get the right people so you don’t want people fraudulently representing themselves to be something that they are not.
“You want the big banks and advisory firms to be doing the right thing by their clients,” Mr Ripoll said.
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