Financial Services Council deems compensation scheme inappropriate
The Financial Services Council (FSC) has come out in support of the so-called St John inquiry into compensation arrangements which suggested a last resort compensation scheme would be "inappropriate and counterproductive" for the financial services industry.
St John's inquiry into compensation arrangements - tabled by Minister for Financial Services and Superannuation Bill Shorten - found that retail clients are generally able to recover compensation for losses and that it would be inappropriate to introduce a last resort compensation scheme at this time.
Furthermore, St John suggested product issuers accept a greater responsibility for consumer protection.
"The FSC commends the findings of this independent report which recognises that the existing Australian regulatory framework is well developed and already provides multiple layers of consumer protection," said FSC director of policy, Martin Codina.
The report also acknowledged that this regime is being further strengthened through a series of regulatory measures, including the introduction of the Future of Financial Advice and Stronger Super reforms.
Shorten and the broader financial planning industry also supported the findings.
"The report had acknowledged the reality that regardless of how stringent the regulations surrounding the provision of financial advice are, there are times where things do go wrong, and appropriate avenues for compensation need to be available to retail consumers," Shorten said.
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