In a statement, Maurice Blackburn said that the compensation scheme of last resort was one of a series of recommendations that had seemingly fallen by the wayside despite the government’s commitment to legislate all of commissioner Kenneth Hayne’s recommendations.
“The delay in implementing a compensation scheme of last resort (CSLR) is another key recommendation that must be acted on – commissioner Hayne’s report makes clear such a scheme is badly needed to compensate victims of negligent financial advisers who have gone bust, yet the government is still to introduce legislation to Parliament for this,” the firm’s principal Kim Shaw said.
“There remains no good reason not to act on this recommendation, and we again call on the government to ensure that a CSLR is implemented this year as a priority.”
The scheme is part of a backlog of forthcoming royal commission legislation that was delayed as a result of the COVID-19 crisis, with the government having passed one tranche of new laws as part of its response to the inquiry late last year, and another currently sitting in Parliament.
At the AFA Vision Conference in October last year, now Minister for Superannuation, Financial Services and the Digital Economy, Jane Hume said legislation around the scheme was likely to be introduced to Parliament in mid-2021.
Ms Shaw said the inquiry had provided “a roadmap for changes needed right across the financial services industry to protect consumers from poor behaviour”, but that the progress made since the commission handed down its final report was disappointing.
“As recent reports have noted, it is now two years since that time and more than half of commissioner Hayne’s recommendations are still yet to be acted on in full or have been abandoned altogether,” she said.
“The government has pointed to COVID-19 as the reason for delay on a number of recommendations, but the fact remains that many of these recommendations are now more important than ever in ensuring consumers are properly compensated for harm caused and protected from poor behaviour.”
Ms Shaw pointed to commitments in the banking and lending sector such as the tightening of responsible lending laws and introduction of the best interests duty for mortgage brokers as two commitments that had been abandoned.
“On today’s two-year anniversary we urge government to urgently act on the remaining Hayne recommendations to ensure people don’t continue to find themselves worse off in the long run,” she said.
