AFA News 19 August 2021. On Thursday 12 August 2021, the AFA joined seven other associations to issue a media release expressing our serious concerns about the Government’s design of the Compensation Scheme of Last Resort.
Please click here to view a copy of the joint association’s media release. We can only hope that the Government will listen to such strong and consistent feedback from so many different organisations.
On Friday 13 August 2021, the AFA made a submission to The Treasury in response to the consultation on the Compensation Scheme of Last Resort proposal paper. In our submission, we strongly expressed our concerns with respect to a range of matters, including the following:
- More needs to be done to reduce the risk of unpaid determinations.
- Product failures must be included in the scope of the scheme.
- Financial advisers should not be expected to pick up 75% of the cost of the scheme.
- The proposal is based upon exorbitant costs for the establishment and administration of a scheme that is only expected to manage a small number of matters each year.
- The incredibly high maximum annual cost of $250 million is excessive.
- Modelling on the basis of a materially underestimated number of financial advisers is concerning.
Please click here to see a copy of the AFA submission on the Compensation Scheme of Last Resort.
The Government are determined to introduce a Compensation Scheme of Last Resort. They will now need to have a close look at the feedback that they have received and hopefully will make some sensible changes to address all the underlying issues. From here we will need to wait for the legislation to be released.
We support a Compensation Scheme of Last Resort, provided it is sensibly and equitably designed and efficiently operated.
This is an important issue for the financial advice sector, as it will be just one more significant cost that flows into the advice sector and is added to an already bloated ASIC Funding Levy.
For any questions on our Compensation Scheme of Last Resort submission, please email firstname.lastname@example.org.
Issued 19.08.2021. AFA Policy & Education Update