The Australian Financial Complaints Authority (AFCA) has reconfirmed its strong support for creating a compensation scheme of last resort (CSLR) in a submission published today.
In a submission to the Government’s public consultation on the topic, AFCA said it and its predecessor schemes have long advocated for a compensation scheme of last resort to fill a major gap in protection for consumers of financial services.
“A compensation scheme of last resort is an important back-stop that ensures that people who have been the victims of misconduct and lost out through no fault of their own can be compensated when the financial firm is unable to pay,” AFCA Chief Ombudsman and Chief Executive Officer David Locke said.
“Without this measure there is a significant gap that will cause considerable hardship to consumers who have done nothing wrong, who have suffered financial loss, taken appropriate action through AFCA, only for that outcome not to be honoured by the financial firm,” he continued.
“Establishing a broad-based compensation scheme covering the financial services industry is an important part of restoring consumer trust and confidence in the financial services sector following the Royal Commission.
“This rebuilding of trust is in the interests of all financial services firms and all Australians.
“We look forward to working with the Government and stakeholders to implement this important reform.”
Published: 5 February 2020
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The Australian Financial Complaints Authority (AFCA) is a non-government ombudsman service providing free, fair and independent help with financial disputes. It is a one-stop-shop for consumers and small businesses who have a dispute with their financial firm, over things such as banking, credit, insurance, advice, investments or superannuation. Where an agreement cannot be reached between parties, AFCA can issue decisions that are binding on financial firms.