Following ongoing calls within the industry to expand the Compensation Scheme of Last Resort (CSLR) Bill, the Senate economics references committee backed the move.
In the report, the committee noted that the government’s proposed model only covers certain financial products and services and that consumers who have invested outside of these provisions, such as managed investment schemes will not be covered by the current CSLR model.
This would also exclude victims of the Sterling Group and Sterling Income Trust that eventually collapsed in 2019, leaving more than 100 customers facing possible eviction and heavy financial losses.
“It is for these reasons, that the committee is of the view that there is a strong case for the proposed CSLR to be expanded, particularly given the evidence of uncompensated losses that have occurred due to failed management investment schemes, such as the SIT,” the report read.
Speaking to ifa, AIOFP head Peter Johnston said the committee’s report highlighted “underlying positive developments… despite the negativity and collateral damage caused by LIF/FASEA legislation”.
“This event clearly indicates that there needs to be finally an official separation of product and advice where you are either an adviser or a manufacturer, you cannot be both,” Mr Johnston said.
“Vertical integration has been used by the institutions over the decades to confuse consumers into placing their savings into expensive under-performing products in a profoundly conflicted environment.”
Mr Johnston said he believes vertical integration should be banned while grandfathering should be available for current operators if their conflicts and ramifications are fully disclosed upfront to consumers.
“The political scrambling by the current government to try and win back support from the advice community is a further indication that the politicians are finally giving us the respect we deserve,” Mr Johnston said.
“There are great times ahead for our industry.”
Meanwhile last Thursday (10 February), the Senate disallowed contentious reforms to proxy advice following much criticism by industry groups over recent months.
Independent senator Rex Patrick’s move to disallow the regulations succeeded by 29 votes to 25.
Peter, I am sure you are not counting your chickens yet and there is much work still to be done? The broadening of CSLR is just plain common sense !!! Politicians are short of this basic skillset !!! the point otherwise is large swathes of unadvised investors will be left cold during the next sterling-esque catastrophy.
Labour and Liberal have no interest winding back the mess that has been created in the advice industry. It is great that there is dialogue with the parties but that is all it is. I think Peter Johnston is mistaking respect with meaningless discussions as we have all witnessed over the years after the Royal Commission. Adviser numbers will reduce further and advice will continue to become more expensive. This is the only thing you can guarantee about the Advice Industry.
Let’s remember Mr Johnston in regards to your “fully disclosure” statement that AMP Advisers fully disclose their “independence” on page 400 of their AMP funded website in size 2 font at the bottom of the page.
but then again, Planners are still using Platforms that give discounts based on the licensee FUM. We are a Long way off from receiving the treatment from Treasury that is more fitting to other professionals. Hub24 for example will give one adviser a discount and another independent Adviser no discounts. Until this muck is sorted we’ll continue to be on the receiving end of bad legislation. Let’s have an Ethics Assignment on that issue shall we.
Too little too late. I will never support the Libs or their shills in the FPA again. The sooner we are rid of them the better.