The comments were in response to Minister for Financial Services and Superannuation Bill Shorten’s response on Friday to the Parliamentary Joint Committee (PJC) on Corporations and Financial Services report about the collapse of Trio Capital, as well as the Richard St John report on Compensation arrangements for consumers of financial services.
Cormann, who issued a joint press release on Friday with Coalition MP and PJC member Paul Fletcher, said the PJC started its inquiry in 2011 – seven years after the Trio fraud began.
“It is completely unacceptable that Bill Shorten has taken nearly a year to consider this report by a key parliamentary committee and even now only just provided a preliminary response,” said Cormann.
Friday’s announcement by Mr Shorten recommended “a range of improvements to governance arrangements to assist investors in understanding and managing risks”.
In particular, the government has committed to enact legislation that will “strengthen the professional indemnity insurance requirements of providers of financial services”, as recommended in the Richard St John report.
In addition, the government has committed to changes that will “improve the communication of risks to investors and to ensure the adequacy of regulatory processes and consultation papers by Treasury on powers to support ASIC in its enforcement role and to improve the governance arrangements of managed investment schemes”.
However, while the government acknowledged that Richard St John did not recommend the implementation of an industry-funded ‘last resort’ compensation scheme.
“The government accepts this recommendation but is mindful of the human cost borne by a small number of people who may not receive their full entitlements in cases where a licensee becomes insolvent,” said the statement.
“In the meantime, the government encourages professional bodies to themselves consider possible solutions to the issue of under-compensation, such as the implementation of their own scheme which further protects retail clients in the event of a member’s insolvency,” said the minister.
According to Mr Shorten, the implementation of the government’s response will be coordinated by a so-called Superannuation Regulators Working Group, comprised of members from Treasury, APRA, ASIC and the ATO.
“The Working Group will consult with the superannuation industry to implement the government response, including considering other initiatives to strengthen the regulatory framework,” Mr Shorten said.
