Consumer advocacy group CHOICE is calling on the Federal Government to pass laws to establish the Compensation Scheme of Last Resort (CSLR) and Financial Accountability Regime (FAR), which have been delayed due to COVID-19.
The Federal Government had originally committed to introduce CSLR to the House of Representatives by 30 December, 2020.
That commitment was delayed until 30 June, 2021, but that deadline had passed without the legislation being introduced due to budgetary issues and no new deadline established.
Alan Kirkland, CHOICE chief executive, said banking and financial advice victims were still waiting on one of the key recommendations of the Royal Commission.
“When the Government delayed Royal Commission reforms by six months due to COVID-19, we saw this as reasonable but with Parliament back to normal operations, people who have lost money due to financial misconduct should not be waiting any longer,” Kirkland said.
The CSLR reform would establish an industry-funded scheme that would compensate people if an ombudsman or court decision is made in a consumer’s favour and the financial institution was unable to pay.
“Across Australia, victims of misconduct in the financial system continue to be left out of pocket,” Kirkland said.
“Some families are waiting on hundreds of thousands of dollars of compensation that can’t be paid until the scheme is up and running. These delays only add to the financial and emotional hardship suffered by these people.”
Legislation on the FAR was also due to be introduced by 30 June, 2021, and Kirkland said a delay in establishing it sent a message to banking executives that misconduct would go unpunished.
“The Australian community expects strong enforcement and penalties for banking executives when they break the law – that requires strong legislation, as recommended by Commissioner Hayne,” Kirkland said.
“We call upon the Treasurer to make these two reforms a priority for the first week that Parliament returns to work in August.
“Without them, wrongdoing by bank executives will continue to go unpunished, and people who have lost money due to misconduct will continue to go uncompensated.”