The ABA’s proposed ‘Compensation Scheme of Last Resort’ for financial advisers is still awaiting government action, according to the seventh report from independent governance expert Ian McPhee.
Mr McPhee’s latest Australian banking industry: Package of initiatives report noted that the implementation of the ABA’s proposed mandatory ‘compensation scheme of last resort’ is now reliant on government action.
The scheme was proposed as one of four parts in the ABA’s second initiative, Making it easier for customers when things go wrong, and followed recommendations made in the Supplementary Final Report of the Review of the financial system external dispute resolution framework, released December 2017.
“ABA has welcomed its release and the recommendation for a prospective compensation scheme of last resort covering financial advisers, noting that recommendation substantially aligns to the position advocated by the industry in its submission to the Ramsay Review,” the report said.
“The adoption and timing of the compensation scheme of last resort is now a matter for government.”
The report also noted another of the four parts of the second initiative – the broadening of external dispute resolution schemes – is also now reliant on Government in order to be implemented.
“Industry-level work on the customer advocate and customer remediation measures for this initiative is now complete,” Mr McPhee said.
“The ABA has advised that it has continued to monitor developments on the final two measures of Initiative 2 where the next phases are reliant on government.”
Mr McPhee also lead the independent review into the CPA after the review panel’s original chair, former Defence Force Air Chief Marshal (ret’d) Sir Angus Houston, stepped down amid concerns about his relationship to then CPA chief executive Alex Malley.
Similar concerns about Mr McPhee were also expressed by CPA members at the time of his appointment.
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