Stephen Jones, the outgoing Minister for Financial Services and Assistant Treasurer, says the Compensation Scheme of Last Resort (CSLR) needs to be reformed, and poured cold water on chatter the new class of adviser will be free to provide personal retirement advice.
Speaking during a webinar with the FSC’s CEO Blake Briggs, Jones said the role of the new class of adviser will be to provide advice on retirement in relation to the person’s interest within funds.
“I can categorically state that this is not some backdoor attempt to have new class of advisers providing a full range of comprehensive advice on all things financial,” said Jones. “That was never the intent. It wasn’t what we announced, and it’s not what we intend to do.”
Compensation Scheme of Last Resort
Turning to the Compensation Scheme of Last Resort (CSLR) Briggs said both major political parties recognise the current CSLR is unsustainable and that reform is required “…before we barrel head-first down to some of the challenges it’s facing”.
Jones was asked if it was a conscious decision not to include managed investment schemes when CSLR was established.
“I want to ensure that what’s occurring doesn’t become a backdoor mechanism to drag that stuff in,” said Jones.
“The conscious reason for doing that…It was going to add a whole bunch of risk into the compensation scheme that I don’t think is sustainably manageable.”
…I think that if let run it could well and truly get away with us…
Jones said there’s broad consensus that a last resort scheme is needed, and that it’s an industry funded model. He took issue with hypothetical losses.
“It troubles me, and I think that if let run it could well and truly get away with us and build irreversible unsustainability,” he said.
Without going into detail, Jones said he has thoughts on what could be done to improve the scheme.
“But we’ve got to have an open and deliberative process if you’re going to be altering rights,” he said.
“People have got to understand why, and what the underpinning of that is, and how what we’re trying to do is have a scheme which is sustainable over the long term. I don’t think we have that right now.”
