The federal government is again being criticised for not yet establishing two banking royal commission draft laws, including the compensation scheme of last resort (CSLR).
This week, consumer advocacy group CHOICE called out the government for the delay of the CSLR — which 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 — and the Financial Accountability Regime (FAR), with a new survey showing overwhelming support for the reforms.
Eighty-one per cent of the Australian respondents agreed that victims of finance investment schemes should receive compensation and 73 per cent said they support a compensation scheme for victims.
CHOICE banking policy adviser Patrick Veyret said it’s time for the government to act.
“Justice delayed is justice denied. Over 1,300 people have had their complaints and compensation award[s] paused until the government passes the scheme,” Mr Veyret said.
“People have lost their entire life savings and are stuck in limbo. For many, compensation is the difference between living a secure retirement and facing a life on the aged pension in the insecure private rental market.”
The survey comes only weeks after CHOICE, alongside other groups including the Association of Financial Advisers (AFA) and the Financial Planning Association of Australia (FPA), called for a strengthened CSLR.
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.
Mr Veyret added that the FAR, which will apply to insurers and superannuation entities, “will hold finance executives to account”.
The bills are expected to be debated shortly, following the government’s announcement that it intends to pass both by the end of 2021.
“By passing these two important laws, the federal government has an opportunity to right some of the wrongs of the banking royal commission,” Mr Veyret said.
Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.
Neil is also the host of the ifa show podcast.
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