Consumer group slams CSLR as ‘ineffective’

Government’s current proposal for the scheme will cap compensations for victims at $150,000 that CHOICE chief executive Alan Kirkland has slammed. 

“When the Government released its response to the banking royal commission, it gave victims of financial scandals hope that they would finally be compensated. For many victims, those hopes have now been dashed,” said Mr Kirkland.

“The Government committed to a scheme that could pay over $540,000 in compensation, as recommended by the royal commission, covering a broad range of financial scandals.

“The proposals now released by the Government will disappoint victims by capping compensation at $150,000 and failing to cover compensation from financial scandals in areas like managed investment schemes and funeral insurance. This will see many people go uncompensated.”

Mr Kirkland’s comments come after eight of Australia’s biggest financial advice industry associations – including the FPA, AFA and SMSF – united to oppose the design of the CSLR that also outlines that the financial advice sector would be forced to pay over three-quarters of costs within the first year of the scheme.

“Victims of financial scandals and banking misconduct deserve better,” Mr Kirkland said.

“To present legislation that is watered down, ineffective and will exclude thousands of victims is a devastating blow. We know from past experience that times of economic crisis provide fertile ground for scams and misconduct. We need strong executive accountability and a compensation scheme for victims now, and we need both measures to be broad-based and effective.

“To carve out people who have lost money in situations like Sterling First or the Aboriginal Community Benefit Fund will have impacts on entire communities who need their money back.”

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.