The government has introduced legislation into Parliament to establish the financial accountability regime and the compensation scheme of last resort – ticking off the final six recommendations of the Hayne royal commission.
“This is a significant milestone that provides consumers of financial services with greater confidence in Australia’s financial system,” Treasurer Josh Frydenberg and Financial Services Minister Jane Hume said in a joint statement.
The government has been accused of dragging its feet on the compensation scheme of last resort (CSLR), which was essentially intended to facilitate the payment of up to $150,000 in compensation for personal advice, credit intermediation, securities dealing and credit provision to eligible consumers who have received a relevant determination for compensation that remains unpaid.
The CSLR has also been at the centre of controversy over some of its perceived inadequacies, with consumer groups arguing it could devastate victims of financial scandals and leave them out of pocket.
In their statement on Thursday, Mr Frydenberg and Ms Hume confirmed that to allow the scheme to start paying claims from 1 July 2022, the government would fund its establishment and contribute to scheme costs in the first year.
The pair did, however, confirm that “to ensure the CSLR truly operates as a scheme of last resort”, it will consult on proposals to enhance the effectiveness of professional indemnity insurance in responding to compensation claims.
Also part of the legislation, the Financial Accountability Regime (FAR) extends the Banking Executive Accountability Regime to all APRA-regulated entities and provides for joint administration between APRA and ASIC.
It is scheduled to apply to the banking sector from the later of 1 July 2022 or six months after the commencement of the legislation. For the insurance and superannuation sectors, the FAR will apply from the later of 1 July 2023 or 18 months after commencement of the legislation.
It really is essential that this government is thrown out at the next election. They have decimated the financial advice industry.
I look forward to seeing the Government use the confirmed $189.4 million in civil penalties as a seed for the scheme…. ohhh thats right, those of us left in the industry will have to yet again foot the bill for those who have flown the coop.
Good thing ASIC and the regulators are on the ball 🙄 so I have complete [b]CONFIDENCE[/b][color=red][/color]!
It’s funny isn’t it. You can be the biggest crook around town then get booted from the industry without even providing any compensation, in the knowledge that those doing the right things will pick up the tab.
Not only that but the greasy lawyers will see this scheme as their own honey pot and try everything to get at it.