{"id":60461,"date":"2022-04-19T14:05:23","date_gmt":"2022-04-19T03:05:23","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=60461"},"modified":"2022-04-19T14:25:22","modified_gmt":"2022-04-19T03:25:22","slug":"cslr-is-the-cure-worse-than-the-disease","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2022\/04\/19\/cslr-is-the-cure-worse-than-the-disease\/","title":{"rendered":"CSLR – Is the Cure Worse Than the Disease?"},"content":{"rendered":"

The Government\u2019s decision not to give the Compensation Scheme of Last Resort (CSLR) a \u2018swift passage\u2019 through Parliament should give Canberra pause for thought, according to The Advisers Association.<\/p>\n

TAA CEO, Neil Macdonald<\/strong> says that at face value, the concept of a CSLR, to protect innocent victims of misconduct, is honourable, however the association believes there has not been enough consideration around either the scope of the problem or the optimal solution.<\/p>\n

\"\"<\/a>
Neil Macdonald.<\/figcaption><\/figure>\n

\u201cThe stalled legislation should give whatever party comes to power after the Federal election pause for thought.\u201d<\/p>\n

Macdonald says the proposed scheme appears to be attempting to solve a $4 million a year problem with a $16 million plus solution.<\/p>\n

\u201cIt has been estimated that there will be $4.36 million in unpaid AFCA determinations each year. It\u2019s also been estimated that the levy to fund the scheme in the first year will be around $16 million \u2013 with advisers expected to pay $12 million \u2013 and around $3.7 million a year just in administration costs.\u201d<\/p>\n

…great care needs to be taken that the scheme doesn’t ultimately cost more to run than the amounts of compensation involved…<\/p><\/blockquote>\n

He says that \u201cgreat care\u201d needs to be taken that the scheme doesn’t ultimately cost more to run than the amounts of compensation involved.<\/p>\n

\u201cAt first glance, the proposed CSLR appears to be a clear case of the cure being far worse than the disease,\u201d he says.<\/p>\n

\u201cWe must also remember that, rightly or wrongly, in most other professions, for example, the medical profession, consumers must sue for compensation if they suffer as a result of misconduct.\u201d<\/p>\n

Macdonald says the scope of the unmet determinations problem needs much closer examination.<\/p>\n

\u201cAdvisers were responsible for only 1.4 percent of total AFCA complaints in 2020\/21, and only 0.03 percent of unmet determinations. It seems unreasonable to create a scheme that focuses on solving only 0.03 percent of a problem.\u201d<\/p>\n

Macdonald suggests it might make more sense to broaden the scope of the CLSR and have the industry sectors responsible for the majority of complaints pay for any unmet determinations.<\/p>\n

\u201cThe Government could allocate funds to AFCA to pay out any unmet claims and at the end of each year charge the costs back proportionally to the sectors of the industry responsible for them,\u201d he says.<\/p>\n

TAA notes that according to AFCA\u2019s 2020\/21 data, most complaints were related to:<\/p>\n

    \n
  • \u00a0Banks (37 percent)<\/li>\n
  • General insurers (20 percent)<\/li>\n
  • Credit providers (12 percent)<\/li>\n<\/ul>\n

    It says that under this model, advisers would pay only 1.4 percent.<\/p>\n

    \u201cEven this is quite unfair on licensed advisers, who are mostly small businesses,\u201d Macdonald says.<\/p>\n

    \u201cWhy should they, as a collective, be forced to pay for the poor behaviour of the very few, many of whom may be unlicensed? So, considering the administrative costs of collecting the levy would be higher than the unmet claims, maybe the levy could be waived,\u201d he says.<\/p>\n","protected":false},"excerpt":{"rendered":"

    The Government\u2019s decision not to give the Compensation Scheme of Last Resort (CSLR) a \u2018swift passage\u2019 through Parliament should give Canberra pause for thought, according to The Advisers Association. TAA CEO, Neil Macdonald says that at face value, the concept of a CSLR, to protect innocent victims of misconduct, is honourable, however the association believes […]<\/p>\n","protected":false},"author":24,"featured_media":60469,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[282,8],"tags":[],"class_list":{"0":"post-60461","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-associations","8":"category-compliance-regulation"},"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/60461","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=60461"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/60461\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/60469"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=60461"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=60461"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=60461"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}