Every time there’s a financial implosion triggering a claim on the Compensation Scheme of Last Resort, it’s the innocent left picking up the pieces. Even the Financial Services Minister Daniel Mulino has conceded as much, adding further weight to the push to make the scheme more equitable.
In Monty Python’s famous Dead Parrot sketch, John Cleese tries to return a clearly dead parrot to the pet shop, but the shopkeeper insists it’s “just resting.” In this guest article, Adelaide adviser Richie Parsons tells why he is haunted by this sketch.
While the second tranche of DBFO reforms remain stuck in parliamentary mud, an inquiry into the CSLR design and Dixons Advisory scandal is already falling behind.
The industry has little chance of fighting through the legislative backlog and getting immediate wholesale change made to the ill-designed CSLR. There are things the government can do in the interim, said the FAAA, but who’s listening?
It’s essential that we learn from the Dixons Advisory scandal, the FAAA chief said, so we can avoid future harm. The association has asked the government to consider a full inquiry into the case, while advisers contemplate the financial toll ahead of them.
Appropriately enough, it took a regulatory breakdown to finally ruffle the policy chief’s feathers. In the first of a series of whitepapers aimed at collating the issues, Phil Anderson lays bare the failures of government, ASIC and E&P Financial Group.
It’s a welcome stopper on the amount advisers will have to fork out, but has no connection to the core issue. The government still fails to recognise the inherent flaws in its CSLR scheme, and the industry is running out of patience.
There are several bones of contention that the FAAA, and the industry more broadly, has with the compensation scheme’s settings, despite supporting it in principle. At the heart of it is the government’s repeated willingness to foist retrospective punishment on the good for the sins of the bad.
The controversial, long-delayed scheme doesn’t protect consumers from high profile managed investment scheme failures like Sterling and Timbercorp, FAAA CEO Sarah Abood said, and could end up adding another layer of unfair fees at the feet of advisers.
