The Government delivered few financial services surprises in the Federal Budget, but did announce that it would be providing $30.7 million to pay compensation to consumers who have been victims of unpaid Financial Ombudsman Service (FOS) determinations.
The Government had committed to the introduction of an industry funded compensation scheme of last resort, but the Treasurer, Josh Frydenberg, went further in the Budget with respect to the Commonwealth funding the unpaid determinations.
“The Government is committed to ensuring consumers and small businesses affected by misconduct have access to redress,” the Budget documents said.
“The Government established the Australian Financial Complaints Authority (AFCA) last November: a one‑stop shop for free, fast and binding dispute resolution. The Government will provide $2.8 million for AFCA to establish a historical redress scheme for eligible financial complaints dating back to 1 January 2008 (the timeframe adopted by the Royal Commission).”
“The Government will provide $30.7 million to pay compensation owed to consumers and small businesses from legacy unpaid external dispute resolution determinations.”
It said it had committed to an industry‑funded compensation scheme of last resort and would provide $2.1 million to Treasury and $0.5 million to AFCA to establish the scheme.