Synchron Director, Don Trapnell is calling for an urgent rethink of funding for the Government’s upcoming Compensation Scheme of Last Resort.
In a statement Trapnell says the advice sector should pay “not a single dollar” towards funding the scheme.
He says that last financial year, “…only 1.4 per cent of complaints to AFCA were related to advice, and of those, only 0.03 per cent were not settled, and yet the advice sector is expected to fund the lion’s share of the CSLR.”
“It beggars belief,” he added.
The statement says that the Australian Financial Complaints Authority received 70,510 complaints between 1 July 2020 and 30 June 2021, 997 of which involved advice. Of those complaints, 974 were settled.
It notes that Treasury’s Compensation Scheme of Last Resort Proposal Paper dated July 2021 revealed that the financial advice sector will be required to pay more than 76 percent of the estimated levies for the scheme (see: Legislation to Establish CSLR Introduced.)
“On the flip side, the Managed Investment Scheme providers, which have wreaked absolute havoc on consumers, will not be required to pay anything at all. It’s absolutely disgraceful,” Trapnell says.
He says an urgent rethink of CSLR funding is necessary.
“The Government must stop making scapegoats out of the advice community, which is clearly not responsible for product failures and not responsible for the vast majority of AFCA complaints,” he says. (Also see: CSLR ‘May be Last Straw’ for Advice Industry.)
“A CSLR levy should instead be imposed on all new products and investment schemes,” Trapnell states.