The Australian Securities and Investments Commission (ASIC) is proposing lifting the compensation cap for financial services external disputes resolutions processes from the existing limit of $500,000 to $1 million.
The regulator has canvassed the lifting of the cap because legislative changes mean it is now responsible for handling matters which previously fell into state jurisdiction, including wills and deceased estates.
On that basis, ASIC is asking the financial services industry whether a higher compensation cap should be applied “where complaints involve beneficiaries”.
It said the higher compensation cap might be justified “because deceased estates would commonly include the family home and a mix of other assets”.
The proposals are included within a consultation paper issued to the financial services industry last week in which ASIC said it had based the $1 million figure on data from the Australian Bureau of Statistics which reported that, in 2006, Sydney households had an average net worth of $697,000.
“We consider that a $1 million cap may be appropriate for complaints brought by a beneficiary as household wealth is likely to have increased since 2006, notwithstanding the likely effects of the global financial crisis,” the regulator said.
