Last resort compensation scheme a step closer
The Federal Government has moved further towards the implementation of a last resort compensation scheme for the financial services industry on the back of the Carnell report into banking practices.
The implementation of a last resort compensation scheme is regarded as having implications professional indemnity insurance regime applying to financial planners.
Faced with a number of adverse findings within the report, the Minister for Revenue and Financial Services, Kelly O'Dwyer has escalated the processes around a last resort compensation scheme by empowering the Ramsay Committee Review of external dispute resolution (EDR) arrangements to formally examine the issue and make recommendations.
The implementation of a last resort compensation scheme has been strongly pursued by the Financial Ombudsman Service (FOS) but resisted by some element of the industry who have been concerned about funding for such a regime.
In a formal response to the Carnell report, O'Dwyer said she had "strengthened the Ramsay Review terms of reference to allow the expert panel to make recommendations, rather than observations, on the merits and potential design of a last resort compensation scheme, and to consider the merits and issues involved in providing access to redress for past disputes".
"The panel will consult with stakeholders and will produce an additional report, with recommendations on a possible compensation scheme, by the end of June this year," she said.
O'Dwyer also signalled the Government's continued pursuit of a "one stop shop" EDR regime, notwithstanding load demands from the superannuation industry for the retention of the superannuation complaints tribunal (SCT).
"The Government has committed to putting in place a one-stop-shop for consumer complaints that will provide speedy access to justice, have the power to make binding determinations and to provide compensation," she said.
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