The scheme aims to provide limited compensation where a determination issued by the Australian Financial Complaints Authority (AFCA) that relates to a financial product or service remains unpaid. The proposed scheme currently only applies to five financial products and services: personal advice on relevant financial products to retail clients, credit intermediation, securities dealing, credit provision, and insurance product distribution.
However, the government is now being urged to expand the scheme to provide compensation for all financial products and services that fall under the jurisdiction of AFCA.
Fifteen organisations including the Association of Financial Advisers (AFA), CHOICE, SMSF Association and the Financial Planning Association of Australia (FPA) have joined forces to push for the expanded scheme.
“Consumers purchase financial services and products from a broad range of product providers, manufacturers and professionals,” FPA CEO Dante De Gori said.
“They deserve the same protections and access to compensation, regardless of where they make their purchase. A last resort compensation scheme must operate equally and fairly across the entire sector to ensure consumers have faith in the system.
“The government must ensure that those product manufacturers who profit from consumers’ investments also contribute to compensation.”
CHOICE CEO Alan Kirkland added that the current proposal excludes victims of managed investment scheme collapses and consumers from First Nations communities who were duped into paying for funeral expenses policies by the Aboriginal Community Benefit Fund, which now trades as Youpla.
“One of the reasons we had a banking royal commission was because thousands of victims of financial misconduct had been left without compensation,” Mr Kirkland said.
“The establishment of a compensation scheme was one of the royal commission’s most important recommendations. The government’s proposals fail to live up to the spirit and letter of the royal commission’s recommendations.”
The move comes a week after the Association of Independently Owned Financial Professionals (AIOFP) addressed finance minister Jane Hume and ASIC chair Joe Longo in a letter asking for clarification of the exclusion of banks from the CSLR.
Well done to Peter Johnston, the pioneer of the equitable CSLR!
Well at least these other groups are finally getting on the bus before it’s arrived at its destination. Wonder what they would have done without the AIOFP leading the charge?
Now for the FSC to show some leadership and tell its members to volunteer to be included. It will cost them less than a week of advertising blitz and avoid the need to prove how community minded they are by said advertising blitz..