The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission) recommended that a compensation scheme of last resort (CSLR) be established and that the three principal recommendations made in the Supplementary Final Report of the Review of the financial system external dispute resolution and complaints framework (Ramsay Review) should be carried into effect (see recommendation 7.1).
The Government’s response to this Royal Commission recommendation agreed to establish a forward looking CSLR that is industry-funded, operated by the Australian Financial Complaints Authority (AFCA), extends beyond personal advice failures and has design features consistent with the recommendations of the Ramsay Review.
The Government has released for public consultation a discussion paper to further explore and seek views on four aspects of the CSLR. These four aspects are:
- coverage, beyond personal advice;
- funding arrangements;
- compensation to be paid; and
- managing scheme evolution.