Key CSLR reports remain pending as costs balloon
ANALYSIS
As financial advisers continue to worry about the burgeoning cost of the Compensation Scheme of Last Resort (CSLR) the Senate Economic Committee inquiry which specifically investigated the impact on the scheme of the Dixon Advisory collapse remains slated to report in a fortnight.
Notwithstanding the May Federal Election and the consequent changes to the make-up of the committee in the new Parliament, the Senate agreed in February to extend the reporting of the inquiry to 28 July.
At the same time, Treasury is yet to generate a report from its post-implementation review of the CSLR notwithstanding the fact that the consultation process ended at the end of February.
But what has changed in the time between the post-implementation review consultation kicking off, and submissions closing on the Senate Economics Committee inquiry is that two more significant failures have occurred which are already being acknowledged as having a potential major impact on the CSLR costs – the Shield Master Trust failure and that of the First Guardian Master Fund.
Advisers already know the dimensions of the looming impact on the CSLR in circumstances where the Australian Financial Complaints Authority (AFCA) has detailed to affected investors how they should proceed, noting with respect to the Shield fund that:
ASIC has listed the main financial firms involved with/having connections with Shield Master Fund as:
- Interprac Financial Planning Pty Ltd (AFSL 246638)
- MWL Financial Services Pty Ltd (AFSL 235096)
- Financial Services Group Australia Pty Ltd (AFSL 225985) (in liquidation)
- Next Generation Advice Pty Ltd (In Liquidation) (AFSL 1296335)
“ASIC has provided more information about who to lodge a complaint against and their applicable representatives based on your concern,” AFCA said.
“You may also wish to contact your superannuation trustee for further information about your investment. If you have concerns about your superannuation or investment platform provider, you may wish to lodge a complaint with the relevant trustee.
“ASIC has identified the following investment platform providers and superannuation trustees as having connections to the Shield Master Fund.
- Macquarie Wrap (investment platform provider), Macquarie Investment Management Ltd (superannuation trustee)
- NQ Super (investment platform provider), Equity Trustees Superannuation Limited (superannuation trustee)
- Super Simplifier (investment platform provider), Equity Trustees Superannuation Limited (superannuation trustee)
“If you have a complaint about the advice you may have received in relation to the Shield Master Fund, and/or a complaint about a decision relating to you by your superannuation trustee about the Shield Master Fund, you may submit your complaints to AFCA.
“If that is your intention, you should do so without delay, as we can only accept complaints about a financial firm while they are a current AFCA member,” the AFCA notification said.
Clients of Dixon Advisory received similar messaging from ASIC and AFCA and costs continue to weigh on the system.
PBCS = Politicians & Bureaucrats Compo Scheme needs to be mandated.
They should all be forced to pay levies for the $1billion in compo Robo Debt cost us tax payers.
How about you also pay up $12billion for Snowy Hydro 2.Budgeted at $2 Billion and now blown out to at least $14billion.
Pay up Pollies & Bureaucrats, why don’t you all pay levies when your industry screws up ??????
What about the ‘net zero’ costs of Blowout Bowens Wind and Solar farms.
Hi there,
For Months I’ve been contacting / complaining to AFCA, ASIC, MWL and Macquaurie Bank about how my wife and I have lost over half a million dollars in the Shield Master Fund bungle. Our Advisor from MWL this week got banned for 8 years. What more evidence of fraud do you need, bet we still have nothing. ??
Hi Steve, most good Real Adviser would feel sick and sorry for your situation.
You guys have been scammed by a mass marketed, vertically integrated bunch of product flogging scum.
The Advisers were likely acting under total control of the managers of the advice business. Not denying their wrongs but it’s the higher up that have orchestrated this.
Along with the MIS owners criminal deceit and fraud.
Help along by the poor Research house ratings and Super Funds that allowed these MIS products to flourish.
Let’s not forget ASIC that is supposed to Regulate but has not.
The problem with CSLR is that good innocent Advisers that have had nothing to do with your terrible losses are the only ones in the whole chain of this financial system that are being made to pay compensation.
The rest that have caused and allowed this massive problem walk away without with their profits.
Unfortunately Steve, ASIC’s approach is not focused on stopping this sort of thing in its tracks before lots of people are scammed, nor on punishing the ultimate perpetrators afterwards.
ASIC is instead focused on broad based persecution of all financial advisers, including the innocent majority, because they are an easier target. CSLR is an embodiment of this “persecute the innocent majority” approach. Failing to focus on the guilty obviously generates bad outcomes for consumers like yourselves. Broad based persecution of the innocent majority generates bad outcomes for the millions of consumers who consequently find it harder to access affordable, professional, advice.
Some people will suggest innocent advisers should have done more to stop the guilty minority, but unfortunately the adviser licensing model strips advisers of power, and gives it to product companies instead. Product companies are the ultimate perpetrators and beneficiaries in most cases of wrongdoing. Advisers have no meaningful element of peer regulation in the current system. Their only option is to report bad behaviour to ASIC, and many do. But as per the above, ASIC rarely takes timely, if any, action against the guilty.
I suggest you take your situation up with your local Federal MP and the senators for your state. Replacing the current bad regulation with good regulation is the only solution. That can only come via Canberra.
Serious question Steve. Do you think it is fair that all honest advisers who had nothing to do with you losing these monies should be forced to reimburse you while those responsible being your ex adviser and the product provider walk away scott free? That is exactly what CSLR promotes. You should be angry at the likes of the government and ASIC who are too lazy and incompetent to take real action against the criminals like your ex adviser and Shield, putting a stop to these types of fraud.