FOS welcomes statutory compensation scheme examination
|
|
The Financial Ombudsman Service (FOS) has welcomed a Government announcement that the outgoing convener of the Corporations and Markets Advisory Committee Richard St John will examine a statutory compensation scheme.
The Ombudsman for Investments, Life Insurance and Superannuation, Alison Maynard, said that recent corporate collapses have highlighted a significant gap in the consumer protection mechanisms afforded by Financial Services Regulation.
“The current requirement that Australian Financial Services [AFS] licensees hold professional indemnity [PI] insurance does not provide consumers with an assurance that they will be duly compensated,” she said.
The Government’s decision to support the Ripoll Inquiry’s recommendation to investigate a ‘last resort’ compensation fund is good news for consumers, she said, adding that a PI policy is not an adequate compensation mechanism.
“FOS has been actively researching and promoting a compensation scheme for two years now. We support an industry-based, industry-funded scheme that would offer ‘last resort’ compensation to retail clients of AFS licensees,” Maynard said.
Such a scheme should be available to all Australians who purchase a financial product or service, not just investors, she added.
“We have developed what we believe is a very good model of a compensation scheme based on our experience in resolving disputes and on the UK model of a compensation scheme,” she said.
Recommended for you
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
Amid the current financial adviser shortage, advice firm Link Wealth is looking to expand its financial literacy program for high school students across the country.
TAL Risk Academy has updated its range of ethics courses to help financial advisers meet their CPD requirements following adviser feedback, including interpreting FSCP determinations.
