A Federal Government paper on compensation for loss in the financial services
sector was released for public discussion today.
The paper discusses issues and options for compensation for loss suffered by
clients for any financial product. It includes services for market-traded products,
those traded outside formal markets and those for which there is no secondary
market.
It also includes financial products which are in the nature of investments
as well as products designed to manage risk. It does not, however, cover loss
caused by market fluctuations or the failure of the institution that issued
the product.
"This is an opportunity to examine from first principles the broad issues
involved in compensation arrangements for wrongdoing by financial services licensees,"
the Parliamentary Secretary to the Treasurer, Senator Campbell, said.
"The aim of the paper is to promote discussion of the basic issues --
the justification and purpose of compensation arrangements in this sector, the
occasions when compensation should be payable, the persons on whom the obligation
to make such arrangements should fall and the mechanisms available.
"It poses many questions on which the industry participants and the public
are encouraged to respond.
"I hope that a wide cross-section of the community will enter into this
debate. It is only with the benefit of industry and public experience and input
that the Government can form appropriate policy to come to grips with these
issues."
The paper is available on the Treasury website (www.treasury.gov.au) and in Commonwealth Government bookshops. There will be a two-month public exposure period.
PERTH
6 September 2002
Contact: Wayne Grant 08 9421 1755 or 0407 845 280