Consumer groups welcome the federal government's commitment to establish a compensation scheme of last resort (CSLR). A well-designed CSLR is a missing link in the financial services architecture in Australia. It is essential that the government gets the design of the CSLR right in the first instance to ensure that the Australian community is protected and trust is restored to the financial sector.
When the government announced in its response to the banking royal commission that it would establish a compensation scheme that extended beyond financial advice, consumer advocates welcomed this move. In order to deliver on the spirit of that commitment, consumer groups recommend the scope of the scheme be expanded to include all financial services products and services that come within the Australian Financial Complaints Authority (AFCA)'s jurisdiction, including funeral expenses providers, managed investment schemes and debt management firms.
The scheme should also be expanded to include court and tribunal decisions and to include voluntary AFCA members. The purpose of the CSLR is to stop people from falling through the cracks, so the government must not design a system with cracks from the outset.
CHOICE, alongside Consumer Credit Legal Service WA, Consumer Action Law Centre, Financial Counselling Australia, Financial Rights Legal Centre, Indigenous Consumer Assistance Network, Super Consumers Australia, Uniting Communities Consumer Credit Law Centre SA and Victorian Aboriginal Legal Service, has made a number of recommendations that will strengthen the design and operation of the compensation scheme of last resort.
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