The federal government’s proposed compensation scheme of last resort doesn’t accommodate payments large enough to cover the losses suffered by consumers according to consumer group CHOICE, with the $150,000 benefit limit “failing to deliver” on its public commitments.
The government has reneged on its original commitment to align compensation caps with those at the Australian Financial Complaints Authority at $540,000, sparking CHOICE CEO Alan Kirkland to request an increase to the larger amount which was recommended at the Hayne Royal Commission.
“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,” Kirkland says.
“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.”
The CHOICE callout comes after eight associations linked to financial advice banded together to protest against the CSLR’s design amid concerns the scheme will be misused, and ignores the real causes of unpaid consumer protection.
“All eight associations support a truly last resort compensation scheme,” the group said in a release. “However, the associations do not support the way the scheme is structured to include Australian Financial Complaints Authority’s (AFCA) outstanding expenses in addition to failing to address the causes of unpaid consumer compensation.”