The Financial Planning Association of Australia (FPA) has called on the government to expand the base of its proposed Compensation Scheme of Last Resort (CSLR) to reflect the jurisdiction of the Australian Financial Complaints Authority (AFCA).
Reacting to the release of the Senate economics legislation committee’s report, which recommended the passage of the Compensation Scheme of Last Resort in its current form, the FPA argued that expanding the definition was the only way to ensure the sustainability of the scheme for consumers and fairness for contributors.
In a statement on Tuesday (15 February), the FPA said that victims of financial misconduct who have received a determination from AFCA deserve access to compensation if their determination goes unpaid.
“In its current form, the model will limit consumer access to the scheme – leaving Australians unprotected if they invest in products such as managed investment schemes that later collapse,” Sarah Abood, chief executive of the FPA, said.
Ms Abood pointed to recent investigations and examples of financial wrongdoing that have highlighted the inadequacy of the government’s approach to the implementation of recommendation 7.1 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
“The FPA, along with 14 other industry and consumer bodies, advocate for the expansion of the CSLR, and the Senate Economic Reference Committee’s own report into the Sterling Income Trust recommends the same,” Ms Abood said.
“With the proposed CSLR model, the government has missed an important opportunity to ensure financial services consumers receive adequate protection.
“It has also failed to ensure that financial planners are not left facing all of the costs to establish and maintain a scheme that will only do part of the job.”
The government’s CSLR model has been widely criticised over its limited coverage of financial products and services.
According to critics, consumers who have invested in managed investment schemes, such as victims of the Sterling Group and Sterling Income Trust, have been hung out to dry.
It should be taken out of Advisers hands. Any MIS looking to raise funds should have insurance for the application process. These funds can be pooled over the years. This would generate a pool of funds available that initial investors might get some of the funds back if they were investing under false pretenses.
The FPA once again trying to prove its relevance and missing the mark. What has the FPA really achieved over the years, accept claiming credit for industry changes (where they had nothing to do it them) and ‘marketing’ the CFP designation (not qualification) … even that proved to be useless once FASEA reviewed the content.
Simply have;
1. ASIC to fund to running costs as they have to bare some responsibility in this.
2. ASIC to do their job in monitoring and supervision of new and existing schemes/investments.
3. ASIC to ensure all licensees have adequate reserves including self licencees
4. One off fee levied to all participants in the Financial services field – Banks, Fund mangers, Licencees and advisers.
If ASIC does their job they should not be many future claims and therefore no future levies or a very small amount.
Maybe I am just to simply….
The Banks and the AMP & Macquarie should be fined $25 million each this would be a good starting point to inject into the CSLR as an initial float
Are the FPA represnting advisers or their big AFSL mates?
Perhaps Ms Abood could enlighten us on what the FPA are lobbying for in regards to adviser education now that both parties have stated their respective vote buying positions.