Small planners should contribute to last resort scheme

Small financial planning groups should be made to pay their way with respect to the introduction of any last resort compensation scheme, according to the Consumer Action Law Centre (CALC).

CALC chief executive, Gerard Brody has told the Senate Economics Legislation Committee inquiry into the establishment of the Australian Financial Complaints Authority (AFCA) that he did not think the big banks alone should be asked to fund a last resort scheme.

He said this was in circumstances where it was often the large providers that had the capital to compensate, “but, where there were independent or smaller financial advisers involved that were the cause of the poor advice, I think at the moment there's around $17 million worth of awards that have been made by [the Financial Ombudsman Service] FOS against such providers that haven't been paid because those businesses have gone insolvent”.

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“…we think that all providers should contribute to the last chance compensation scheme—the smaller providers as well as the big banks,” Brody said.

“While the big banks might have the resources to compensate their customers directly, they also enjoy the benefits from an effectively regulated financial system and the confidence that the community has in such a system,” he said. “So we think it's fair that all providers should contribute to that sort of fund.”

Earlier, Brody told the committee that the model under consideration for a last resort compensation scheme involved an up-front levy paid by all industry bodies.

 




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Wow. That doesn't smack of self interest does it? Lets make the pot for the lawyers to feed off as big as possible (and its easier to pick on the little guys too). Bottom feeders cover themselves in glory again.

“While the big banks might have the resources to compensate their customers directly, they also enjoy the benefits from an effectively regulated financial system and the confidence that the community has in such a system,”
Wow, what planet is this guy on?

A last resort compensation scheme will not, as a practical matter, achieve a great deal - the key issue being that the compensation will be capped at relatively low amount and it will still be necessary to incur costs so as to establish liability to receive compensation - what is required is fundamental reform of the PI insurance regime such that when when a Determination is made by by AFCA the Determination will actually be paid.

ASIC are siphoning $26m from the industry for nothing, they should be the last resort compensation. They have failed the Industry for long enough.

I wonder if there are any figures showing how much money was spent on lawyers by insurance companies and plaintiff's contesting insurance payouts.

Maybe something should be done to regulate the lawyers handling insurance claims. Maybe the lawyers governing bregulator should limit the amount they get paid to help clients with their insurance claims, or enforce a best interests duty for Lawyers.

Oh no, thats right. The regulators only want to restrict how much Financial Advisers, who legally have to act in the best interests of their clients, get paid.

I would also like to see the statistics of the percentage of claims where external lawyers got involved when the policy has a non bank, super or insurance aligned adviser, vs policies set up by a vertically integrated adviser and also vs a policy set up directly or through their super without an adviser.

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