The end of year rush

compensation scheme of last resort Jane Hume Financial Standards and Ethics Authority

26 November 2021
| By Jassmyn |
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As 2021 draws to a close it will be a rush to the end of the year with a number of issues left to resolve.

As of writing, the compensation scheme of last resort (CSLR) legislation still has not passed but the government should reconsider its stance on expanding the scheme to managed investment schemes (MIS).

The minister for superannuation, financial services and the digital economy, Jane Hume, recently said that CSLR should not be expanded to cover MIS or high-risk investments despite multiple calls from industry associations to do so.

Hume’s reasons included that the CSLR was not designed to pay compensation to any consumer who lost money in an investment and that it was intended to cover unpaid compensation due to misconduct relating to a target range of products and services.

However, in the case of the Sterling Income Trust, it was complicated to understand and the information given to consumers was not enough to disclose its complexity. 

If the government does expand the CSLR not much is stopping other complicated MIS with overly-ambitious business models from operating.

Another rush to the end of the year will be the Financial Standards and Ethics Authority (FASEA) amendment to its problematic Standard 3 of its code of ethics given by 1 January, 2022, FASEA would have folded into Treasury. This means, the amendment announced would need to be finalised before the end of this year.

The last 2021 FASEA exam results will also come out before the end of the year, the last chance for advisers who cannot use the exam extension to pass. The results will give an indication of how many advisers will have to walk away from the industry, before the 2026 education requirement deadline.

This is the last print edition of Money Management for 2021 and will be back in February 2022. The Money Management daily newsletter will continue through to Friday 17 December and resume in the second week of January, 2022. 

The Money Management team wishes our readers a happy holiday season and a safe and prosperous New Year.

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