Can FAAA extract concessions on CSLR?

Fresh on the heels of the major accounting groups extracting key concessions from the Government around the TASA Code of Conduct, the Financial Advice Association is seeking to extract key changes to the Compensation Scheme of Last Resort (CSLR) via working with Treasury.

But while confirming it is working with Treasury to fix the CSLR, the FAAA also ramped up its calls for a public inquiry into the collapse of Dixon Advisory.

The FAAA issued a statement in which it insisted a public inquiry into the Dixon Advisory collapse is necessary in circumstances where the compensation bill could be as much as $135 million and cost financial advisers more than $8,000 each.

FAAA chief executive, Sarah Abood said that while her association had started working with Treasury to fix issues with the CSLR, it remained essential to learn the full extent of the issues behind the Dixon Advisory collapse and ensure they were not repeated.

“A public inquiry would provide clarity around the key questions that remain unanswered, including how the money was lost in the Dixon Advisory scheme, what role directors and senior management played, and why ASIC failed to adequately investigate and take action in a timely way, despite numerous complaints from as early as 2008,” she said.

The FAAA said that, building on recent advocacy for a fairer scheme, it had met with Minister Stephen Jones in August to raise key concerns regarding the CSLR, including the total cost of the scheme, and whether it is operating as a true last resort.

“The financial advice profession is made up of small business owners, and 92 per cent of advice practices have five or fewer advisers. Our sector simply can’t afford to underwrite the malpractice of large, listed companies, and nor should we,” Abood said.

“This was supposed to be a last resort scheme to compensate Australians who were the victims of poor or negligent financial advice, when all other avenues of restitution had failed. Instead, in the absence of true accountability for those responsible, it’s become a scheme of first resort for the many Australians that were caught up in the Dixon Advisory scandal.

“We owe it to consumers to ensure that the CSLR is fairly and sustainably funded. A public inquiry into what happened at Dixon Advisory is critical, so we can learn the lessons of this failure and ensure it can never happen again.”