Tria managing partner Andrew Baker in his monthly Trialogue update described the government's response to a parliamentary joint committee enquiry and the associated Treasury review as "unconvincing" and "nonchalant".
Specifically, to absolve the regulators of blame is "dubious", he said.
The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) "come out pretty well from the review", which gives "excuses" as to why APRA failed to detect the large scale and long-running fraud, according to Mr Baker.
This was despite concerns dating as far back as 2005, with no formal investigation initiated until 2009 following revelations from Bronte Capital chief investment officer John Hempton on his blog.
Investigations should have commenced when the Trio board was unable to provide accurate valuation data in response to an APRA review in late 2008, according to Mr Baker.
Attention has so far focused on the proposed further tightening of capital and professional indemnity insurance requirements for advisers, while the prospect of a last resort compensation scheme has not been adopted - although the door remains ajar.
"Conflicted advice implicitly seems to get much of the blame for Trio, but other fundamental issues have been rather whitewashed," Mr Baker said.
Affected members of APRA regulated funds began receiving $54 million in compensation payments in 2011 but investors exposed through self-managed super funds (SMSFs) or personal investments had no such recourse available.
SMSFs remain "highly exposed to fraud" and the government response confirms there is no compensation available for SMSFs, even if they invest via a pooled superannuation trust, Mr Baker said.
"As a result, there's a strong case here for SMSFs offered by large financial institutions or investing in funds issued by large firms. It doesn't guarantee against fraud, and there's still no formal compensation, but you stand a much better chance of being made whole in such an event," he said.
"A large financial institution simply couldn't afford the brand damage."
Mr Baker said the decision to refer the issue of investment fraud to the Heads of Commonwealth Operational Law Enforcement Agencies (HOCOLEA) for on-going consideration, and to elevate warnings to SMSF trustees that they are not eligible for compensation in the event of fraud, was unconvincing.
"For me, this is not being taken very seriously, and it certainly won't dissuade any self-respecting fraudster," Mr Baker concluded.
