At the same time the government announced former Financial Planning Association chief executive Jo-Anne Bloch as chair of Compensation Scheme of Last Resort, it has further indicated legislative amendments to give consumers assurance over the scope of the scheme.
The CSLR, which officially commences from 2 April (the first of the month falls on Easter Monday), allows consumers to be able to lodge claims for compensation from unpaid determinations from AFCA.
The Minister for Financial Services Stephen Jones said that amendments will be made to the CSLR legislation “in due course” to provide further certainty to consumers about the scope of the scheme.
Specifically, these changes would be to make sure it is intended to provide compensation where the misconduct is by a financial services firm that was licensed to provide the relevant product or service.
“As an interim step, amendments have been made to AFCA’s authorisation so that, to the extent possible, complaints that may be eligible under the CSLR are progressed only if the financial services firm was licensed to provide the relevant product or service,” Jones said in a media statement.
“Consequential changes to AFCA’s Rules will be required to implement the amendment to AFCA’s authorisation.”
Legislated last year, the CSLR will provide compensation of up to $150,000 to eligible consumers of personal financial advice to retail clients, securities dealing for retail clients, providing credit, and arranging credit.
The government will foot the bill for the CSLR this financial year, which is estimated to be $241 million and expected to focus heavily on claims from Dixon Advisory, with industry levies to support the scheme in future years.
There is a sector levy cap of $20 million included in the legislation, but a July 2021 consultation paper from Treasury estimated the ongoing levy would be $6.17 million a year, four years after the system was implemented.
The appointment of Bloch for a three-year term marks the completion of board appointments and was independently appointed by the minister in accordance with legislation, officially commencing at the start of the month.
Bloch will join recently appointed board members Kevin O’Sullivan and Delia Rickard, along with David Berry as CEO of the scheme.
“Ms Bloch is an experienced leader in financial services, and in particular financial advice, with extensive experience in engaging government and in the not‑for‑profit sector, and is well‑equipped to guide the scheme at its inception and beyond,” Jones said.
