The Parliamentary Secretary to the Treasurer, Senator the Hon Ian Campbell, announced today that he intends to release an issues paper for industry consultation on a framework for compensation arrangements in the financial services sector.
Under the financial services reform legislation, licensed financial service providers must have in place adequate compensation arrangements which cover breaches of their obligations under the law in relation to their dealings with retail clients. Operators of financial markets are also required to have compensation arrangements.
"One of the key objectives underlying the Government's new financial services reforms is enhanced protection for consumers participating in our financial services sector. An important element of this is providing consumers with some assurance that their rights will be protected, and their actions or requests appropriately handled," Senator Campbell said.
Speaking at a conference conducted by the Committee for Economic Development of Australia today, Senator Campbell noted that the area under discussion is the compensation arrangements available where consumers have suffered a financial loss as a result of the financial service provider failing to provide the service promised, or breaching its obligations under the law. However, these arrangements are not intended to provide compensation for any loss suffered as a result of an investment which provides a poor return, or the collapse of the issuer of a financial product.
The issues paper is expected to consider the limits of the conduct to be covered by the compensation arrangements, and the future role of both financial services providers and the operators of financial markets in making these arrangements.
"The issues paper that I will be releasing later in the year will form a crucial element of the Government's financial services reform package. However, the issues involved are complex, and will require an extensive and co-operative approach by both Government and industry to get the right outcome," Senator Campbell said.
Senator Campbell added that he has asked Treasury to prepare the issues paper with the Australian Securities and Investment Commission and the Companies and Securities Advisory Committee, with the aim of seeking preliminary industry feedback on the issues around the middle of the year.
CANBERRA
28 February 2002
Contact: Tammie Webb, Senator Campbell's Office
08 9325 4227 or 0417 400 227
http://parlsec.treasurer.gov.au