I thank the Chair for giving me the opportunity to raise the issue of the regulation of investment advisers. The recent collapse of a number of investment firms, subsequent court cases and the subsequent major financial loss to clients highlights a substantial gap in the regulation of the investment services sector. Any investment intermediary selling non-insurance products, such as unit trusts, is not obliged to satisfy any requirements in respect of the handling of client funds, the provision of bonds or the issue of appropriate documentation to clients. It is not acceptable that individuals should be exposed in this way.
Consumers investing in life assurance products through insurance intermediaries have a reasonable level of protection following the enactment of the Insurance Act, 1989. It is vital that equivalent protection is given to consumers investing through investment advisers in non-insurance investment products. All investment intermediaries should be licensed through the Department of Finance or the Central Bank. Powers should be available to prevent an investment company from trading if malpractice is discovered, and a compensation fund should be established through the licensing system to give some or all of the investors' finance a certain level of protection. Under present investment criteria there is every incentive for an Irish investor to invest in the UK or in some other European country where consumer protection exists. This is an ironic situation, whereby the Government's failure to introduce regulations to protect investors implies that it is much more important that they invest abroad rather than at home. This is scandalous. We badly need change. I am calling on the Minister for Finance to introduce regulations immediately to protect the consumer in the financial services area and not allow this appalling cop-out in relation to clients' finances to be allowed to continue.
