Consumer advocate group CHOICE has lambasted the government’s planned Compensation Scheme of Last Resort (CSLR) for being inadequate and leaving consumers who have purchased certain products unprotected.
In a letter sent to Western Australian MPs this week CHOICE CEO Alan Kirkland said the CSLR’s design meant it only covered five types of financial products and services, with the most egregious omission being Managed Investment Schemes.
The scope of the scheme is “too narrow”, Kirkland said, and will leave victims of financial scandals uncompensated when the financial firm in question is unable to pay due to collapse or insolvency.
The CEO highlighted the plight of a people who fell victim to the Sterling First MIS collapse in Western Australia. Over 100 people will be excluded from the CSLR, he said, including 80-year old Marsha Barber who lost $126,000 when the Sterling First scheme went under.
“Emotionally it became very difficult for me because my husband had developed Alzheimer’s and he could not understand what was going on,” Barber said. “So I pretty well coped with things alone and looked after him at the same time.”
The government has scheduled an introduction of the CSLR bill in the spring sitting, with draft laws being written in the interim.
Said Kirkland: “There is an opportunity to assist victims of banking misconduct like Marsha and other Western Australians who have been left uncompensated.
“The Federal Government’s proposed compensation scheme will abandon too many victims of
financial misconduct,” he continued. “Victims of financial crime deserve better.”