The Federal Government has released exposure draft legislation to implement the Royal Commission recommendations of the compensation scheme of last resort (CSLR) and the financial accountability regime.
The CSLR was meant to be implemented at the end of the financial year, but was delayed for budgetary reasons, but the regulation was expected to be passed and enacted between Q421 and Q122.
The Minister for superannuation, financial services and the digital economy, Senator Jane Hume, said: “The establishment of the Compensation Scheme of Last Resort will support ongoing confidence in the financial system’s dispute resolution framework by facilitating the payment of compensation to eligible consumers who have received a determination for compensation from the Australian Financial Complaints Authority (AFCA) which remains unpaid”.
The financial accountability regime would extend the banking executive accountability regime to all Australian Prudential Regulation Authority (APRA) regulated entities and would be jointly administered by APRA and the Australian Securities and Investments Commission (ASIC).
“The financial accountability regime imposes a strengthened responsibility and accountability framework within financial institutions, recognising that decisions taken by directors and the most senior executives of financial institutions are significant for millions of Australians and the Australian economy,” Hume said.
The Government also released the ASIC report into industry’s transition away from grandfathered conflicted remuneration.
The Government introduced legislation to remove grandfathering arrangements for conflicted remuneration from 1 January, 2021, and to require product issuers to rebate these amounts to consumers.
Following a direction from the Government, ASIC’s investigations found that financial product issuers had fully terminated 96% of grandfathered conflicted remuneration arrangements by 31 December, 2020, and approximately $266.7 million had already been rebated to consumers over the period 1 July, 2019, to 31 December, 2020.
A further $24.4 million was estimated to be rebated to consumers during 2021.
Submissions on the legislation will be open until 13 August.