"The compensation scheme of last resort is one of the missing pieces of Australia's financial system. This will ensure that when people have been awarded compensation by the Australian Financial Complaints Authority (AFCA), they don't miss out simply because the firm that is meant to pay up has gone out of business.
"It has been over 1,300 days since the previous Federal Government committed to establishing a compensation scheme. It is a landmark recommendation of the Banking Royal Commission. We welcome its introduction because every day that it is delayed affects thousands of people who are waiting for compensation."
"CHOICE remains concerned that the compensation caps are too low. Both the Ramsay Review and the Banking Royal Commission made it clear that the caps should be the same as those that apply before the Australian Financial Complaints Authority (AFCA). That would allow up to $542,500 for most individual complaints, so the $150,000 cap in this bill will fall far short for many victims."
"We maintain that this scheme should be expanded to include managed investment schemes. The scandals surrounding Sterling First demonstrate why victims of managed investment schemes need access to compensation. While we understand that it may take more time to address the many problems with managed investment schemes, we are seeking a clear timeline and process from the Federal Government to address those issues."
"A strong theme of the Banking Royal Commission was that senior leaders of financial institutions were not held to account for misconduct that occurred under their watch. We call on the Parliament to strengthen the draft legislation introduced today establishing the Financial Accountability Regime by attaching strong civil penalties for senior financial leaders who break the law."
Media contact: Daniel Scoullar, 0430 172 669, media@choice.com.au
Editor's notes:
The following pieces of draft legislation were introduced into the House of Representatives today:
- Financial Sector Reform Bill 2022
- Financial Accountability Regime Bill 2022
- Financial Services Compensation Scheme of Last Resort Levy Bill 2022
- Financial Services Compensation Scheme of Last Resort Levy (Collection) Bill 2022
Recommendation 7.1 of the Banking Royal Commission recommended the establishment of a Compensation Scheme of Last Resort.
