The fourth property financier to collapse in 18 months is another devastating blow for financial advisers, a consumer advocate says.
Denise Brailey, a lobbyist with litigation firm IMF, said the failure of Bridgecorp Limited will deter consumers already stung by the collapse of Westpoint, Fincorp and Australian Capital Reserve (ACR) from seeking advice.
"It's just devastating to the financial planning industry," said Brailey, who runs a support group for Westpoint victims.
"It's likely there will be some people in Bridgecorp who were put in there through planners [who were involved with] Westpoint," she said.
"I'd like to see the financial planning industry calling for a more stringent regulatory approach so pressure is brought to bear on these types of models."
The New Zealand company and several subsidiaries were handed over to receivers PricewaterhouseCoopers on Monday after the group defaulted on repayments to investors.
Property Investment Research withdrew its 3.5 star rating for the group the same day.
The 13-year-old company has a book of 94 loans and owes around $500 million to 18,000 investors.
It trades in secured and unsecured debenture notes that offered returns of up to 12.5 per cent.
Investor funds are used to loan money to property developers in Australia, New Zealand and Fiji.
A waning property market, regulatory action, the resignation of two senior staff members and project delays has put increasing pressure on the group.
It reported a pre-tax operating profit of $8.5 million for the half year to 31 December 2006, down 47 per cent for the same period last year.
In February 2006 ASIC stopped the group's Australian operations, Bridgecorp Finance, from raising more funds.
The regulator had become concerned that it had run into financial problems through its exposure to Westpoint's Bayshore development in Melbourne.
Around $1 billion is owed to Australian investors who put their life savings into similarly structured investments through Westpoint, Fincorp and ACR.
It is not known if planners were exposed to Bridgecorp products as they were in Westpoint, where some planners received unusually high commissions of between 10 to 13 per cent.
