"The Australian community has not forgotten the scandals of the Banking Royal Commission. However, it's been two and a half years since the Federal Government committed to cleaning up the banking industry. Many victims remain without the compensation they deserve while many banking executives have got off scot-free," says CHOICE's Banking Policy Adviser Patrick Veyret
This comes as a new nationally representative survey by CHOICE shows widespread support for the passage of two landmark Royal Commission reforms including a compensation scheme of last resort (CSLR). The survey found:
- 8 in 10 Australians (81%) agree victims of finance investment scams should receive compensation if they have lost money.
- Almost three quarters of Australians (73%) indicate they support a compensation scheme for victims of financial misconduct.
"In February 2019, the Federal Government committed to establishing an industry-funded compensation scheme for victims of financial misconduct. The scheme has widespread public support with almost three quarters of Australians supporting its establishment. It's time for the Federal Government to act and establish a strong compensation scheme," says Mr Veyret.
"Justice delayed is justice denied. Over 1300 people have had their complaints and compensation awarded paused until the Government passes the scheme. People have lost their entire life savings and are stuck in limbo. For many, compensation is the difference between living a secure retirement and facing a life on the aged pension in the insecure private rental market," says Mr Veyret.
The survey also found that there is strong community support for personal penalties for finance executives, while trust in executives to treat customers fairly remains at very low levels. The survey found:
- 9 in 10 Australians (90%) agree finance executives should be subject to personal fines when they break the law.
- 15% Australians trust Australian finance executives to treat their customers fairly.
"The Australian community expects that banking executives are held to account when misconduct occurs under their watch. Executives who appeared before the Royal Commission admitted to targeting vulnerable consumers with harmful products yet not a single banking executive was prosecuted," says Mr Veyret.
"If designed correctly, the new Financial Accountability Regime will hold finance executives to account, ensuring customers are treated fairly."
Legislation is expected to be debated as early as next week, with the Federal Government announcing its intention to pass both bills by the end of the year.
"By passing these two important laws, the Federal Government has an opportunity to right some of the wrongs of the Banking Royal Commission," says Mr Veyret.
Media contact: Jim Hook, 0430 172 669, firstname.lastname@example.org
- On 4 February 2019, the Banking Royal Commission released 76 final recommendations to reform the financial system.
- The Federal Government committed to introduce the Compensation Scheme of Last Resort (CSLR) and the Financial Accountability Regime into the House of Representatives by 30 December 2020.
- The CSLR is an industry-funded scheme that will provide compensation to victims of
financial misconduct. This scheme will step in where a consumer or small business has been awarded compensation by the financial ombudsman, the Australian Financial Complaints
Authority (AFCA), but the financial firm does not pay it. This is usually because the firm
has become insolvent.
- The Government delayed these reforms another six months until 30 June 2021 due to COVID-19.
- On 16 July 2021, the Australian Federal Government released its proposal for the Compensation Scheme of Last Resort.
- The survey was designed and analysed by CHOICE with fieldwork and sample of n = 1,045 provided by The ORU. The ORU are ISO 20252 and 26362 accredited and are full AMSRO members. The data has been weighted to ensure it is representative of the Australian population based on the 2016 ABS Census data based on age, state, gender, household income and education levels.