The government originally committed to introduce the compensation scheme of last resort (CSLR) – which would compensate anyone if an ombudsman or court decision is made in a consumer’s favour and the financial institution is unable to pay – to the House of Representatives in December last year following the release of the financial services royal commission’s report. However that deadline was pushed back to 30 June this year due to the ongoing COVID-19 pandemic.
The Treasurer told ifa that while it “remains committed” to implementing the Hayne royal commission, the government needs further consultation.
“Given their complexity and need for further stakeholder views, the government will commence further public consultation before the parliament resumes on how best to implement the two remaining substantive elements requiring legislative implementation, specifically establishing a financial accountability regime and establishing a compensation scheme of last resort,” the Treasurer said.
The FAR would hold finance executives accountable for misconduct and could see them hit with a $1,050,000 fine and disqualification from operating as an accountable executive.
However, the Treasurer added that “substantial progress” has already been made, saying that “over 78 per cent of the recommendations directed to government have been implemented”, while three Hayne recommendations relate to reviews to be undertaken next year.
It comes after consumer advocacy group CHOICE chief executive Alan Kirkland slammed the delays, saying “people who have lost money due to financial misconduct should not be waiting any longer”.
“Across Australia, victims of misconduct in the financial system continue to be left out of pocket. Some families are waiting on hundreds of thousands of dollars of compensation that can’t be paid until the scheme is up and running. These delays only add to the financial and emotional hardship suffered by these people,” Mr Kirkland said.
“It’s also critical that the Government moves to introduce the Financial Accountability Regime, to protect people from misconduct in the future.”
He continued: “The delay in establishing the Financial Accountability Regime law sends a message to banking executives that misconduct will go unpunished.
“The Australian community expects strong enforcement and penalties for banking executives when they break the law. That requires strong legislation, as recommended by Commissioner Hayne.
“We call upon the Treasurer to make these two reforms a priority for the first week that Parliament returns to work in August. Without them, wrongdoing by bank executives will continue to go unpunished, and people who have lost money due to misconduct will continue to go uncompensated.”
This just baffles me….it’s exactly why we need a complete re-work of industry associations like the FPA that want to continue to represent large institutions…..when a large CEO or insto is looking like suffering some small inconvenience they can go to Government and come out with this outcome and it’s “hey let’s consult”… but when a small individual adviser as a collective says the same thing around FDS and Consent forms..these Association always say “let’s see what happens” followed by “it’s legislation we just need to live with it and we represent those firms too”. Why do advisers continue to support that model…are they just happy for more regulation so they can charge higher SoA’s?
Yes the public do excect he banking executives to face some kind of penalty for destroying peoples fiunancial security. However there will never be any such accountability. Just look at the outcome of the banking royal commission. NO BANKERS GOT IN ANY TROUBLE AT ALL. A few lost their jobs (but not their multi million $ bonuses) and went to work for another bank in a similar role.
Bankers, just like policitians, are above the law as they are the ones who make the laws and decide who to punish. And they have all decided to punish the independent financial advisers and their porly paid banks sales staff as we are the easy targets
The more this Govt over-regulates like this, the more there is going to be an explosion of unlicensed money coaches etc floating around out there. Plus smart advisers, as real estate rental managers have done, will start developing a risky client list between themselves, to avoid investors who are skilled at cleaning out advisers. This will evolve into a complete farce & waste of time, and will end up being unwound eventually. There is a limit to what advisers can tolerate in a just and fair manner.
Kirkland, who are these people who are owed hundreds of thousands?
Another inaccurate and misleading representation without consequence.