Review of compensation arrangements for consumers of financial services - Consultation on final report
As part of the Future of Financial Advice (FoFA) reforms announced on 26 April 2010, the Government commissioned Richard St. John to undertake a review to consider the need for, and costs and benefits of a statutory compensation scheme. This review was announced in response to recommendation 10 of the report by the Parliamentary Joint Committee on Corporations and Financial Services Inquiry into financial products and services in Australia.
Richard St. John's final report to Government considers: the need for a statutory compensation scheme, strengthening current compensation arrangements and rebalancing responsibilities of licensees. The report concludes with a number of recommendations.
The report considers these matters. In particular:
- Chapter 1 outlines the scope of the review and the review process, and provides background.
- Chapter 2 describes and assesses the current arrangements for the protection of retail clients who deal with providers of financial services.
- Chapter 3 looks at the scope for retail clients to obtain compensation for licensee misconduct in the context of recent collapses of financial services providers.
- Chapter 4 considers possible legislative and administrative measures to bolster the current compensation arrangements and make licensees responsible for the consequences of their own misconduct.
- Chapter 5 considers possible measures to redress an apparent imbalance between the responsibilities borne by financial advisers compared to the issuers of products given that financial product failure generally underlies claims against advisers.
- Chapter 6 addresses the possible design and governance of a scheme of last resort, if one were to be introduced, to provide compensation in circumstances where a licensee does not have the financial resources to meet a claim for compensation by a retail client.
- Chapter 7 provides an overview of the report and its findings and conclusions on the need to strengthen the current arrangements for compensation of retail clients. It sets out a number of recommendations for further action.
- Appendix A provides a summary of the consultation paper.
- Appendix B provides an overview of submissions.
- Appendix C provides a summary of other financial sector compensation arrangements.
- Appendix D provides an overview of compensation arrangements in other countries.
- Appendix E outlines the Corporations Act Regulations.
|Final Report (consolidated)||970KB||-|
Submissions for this consultation closed on 6 July 2012.
Thirteen submissions have been received in response to this consultation. Twelve of these are public submissions and one is confidential. The public submissions are listed below.
|Association of Superannuation Funds of Australia (ASFA)||72KB||N/A|
|Credit Ombudsman Service Limited (COSL)||392KB||N/A|
|Financial Ombudsman Service (FOS)||601KB||N/A|
|Financial Planning Association of Australia (FPA)||66KB||N/A|
|Financial Services Council (FSC)||1.1MB||N/A|
|Insurance Council of Australia (ICA)||88KB||N/A|
|Joint Accounting Bodies (CPA Australia, the Institute of Chartered Accountants in Australia and the Institute of Public Accountants)||202KB||N/A|
|Joint Consumer Organisations||968KB||489KB|
|National Insurance Brokers Association of Australia (NIBA)||433KB||N/A|
|Professional Investment Services (PIS)||484KB||553KB|
|Stockbrokers Association of Australia||319KB||N/A|
|Self Managed Superannuation Funds Professionals' Association of Australia (SPAA)||603KB||N/A|
The opinions expressed in the submissions are those of the authors and do not necessarily reflect the views of the Government or The Treasury.