The Financial Planning Association of Australia (FPA) is concerned the Government’s proposed model for a Compensation Scheme of Last Resort (CSLR) will not provide adequate protection for Australian investors in its current state.
In response to the release of the Senate Economic Legislation Committee’s report, the FPA was once again calling on the Government to expand the base of its proposed CSLR to reflect the jurisdiction of the Australian Financial Complaints Authority (AFCA).
Sarah Abood, FPA chief executive, said: “This would ensure the sustainability of the scheme for consumers and fairness for contributors.
“Victims of financial misconduct who have received a determination from AFCA deserve access to compensation if their determination goes unpaid.
“In its current form, the model will limit consumer access to the scheme – leaving Australians unprotected if they invest in products such as managed investment schemes that later collapse.”
Abood said a number of recent investigations and examples of financial wrongdoing had further highlighted the inadequacy of the Government’s approach to the implementation of recommendation 7.1 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The FPA, along with fourteen other industry and consumer bodies, advocated for the expansion of the CSLR, and the Senate Economic Reference Committee’s own report into the Sterling Income Trust recommended the same.
“With the proposed CSLR model, the Government has missed an important opportunity to ensure financial services consumers receive adequate protection,” Abood said.
“It has also failed to ensure that financial planners are not left facing all of the costs to establish and maintain a scheme that will only do part of the job.”
