CSLR genuinely a ‘last resort’ says Bloch
The Compensation Scheme of Last Resort (CSLR) needs to be regarded as truly a last resort, according to its new chair, Jo-Anne Bloch.
Addressing Financial Newswire’s Advice, Wealth and Super Conference in the Hunter Valley, Bloch emphasised the processes which needed to be exhausted before claims were ultimately handled by the CSLR.
She said the scheme is currently dealing with 70 claims and is assessing how many it will be dealing with over coming months and the future of doing so.
Bloch explained that the scheme’s mandate was not only about managing and assessing claims but also about lifting levels of ethical conduct.
She suggested that, over time, it was to be hoped that improved levels of ethical conduct would drive down the cost of the scheme.
But looking at the immediate task in front of the CSLR since its kick-off in April, Bloch said the board did not specifically know the actual level of claims it would be dealing with but was working on the basis of solid assumptions.
She said those assumptions would be firmed up by the number of claims which ultimately come in to be dealt with.
Bloch told conference delegates that while she was sympathetic to the views of some advisers about the cost and funding of the CSLR, the underlying legislation was clear-cut and the Board was simply acting to implement that legislation.
Conference delegates expressed concern about why the professional indemnity (PI) insurance regime was not adequately covering instances of poor advice, prompting Bloch to point out the reality of the “last resort’ status of the scheme.
She noted that claims only reached the CSLR after the PI and Australian Financial Complaints Authority (AFCA) processes had been exhausted.
Dear CSLR, why weren’t the Dodgy Directors of Dixon’s MIS held personally liable?
Dear ASIC, why did you do nothing against Dodgy Dixon when you had 10 years of so many warning and complaints?
ASIC why did you let Dodgy Dixon’s directors float on the ASX when you were highly aware of the MIS fiasco?
Hardly seems like a Last Resort.
Seems like incompetent, useless ASIC making Advisers pay for their failures to act in a timely and effective manner.
Another moral hazard.
As a practising adviser, if I come across poor advice by another practitioner and report it to the authorities, the most likely scenario is that it ends up costing me more in regulator fees paying for ASIC and in client compensation paying for CSLR.
The people most likely to identify and be able to report on bad advice are the ones who have to end up paying for it.
You couldn’t design a dumber system destined to fail if you tried.