The Parliamentary Secretary to Treasurer, the Hon Ross Cameron MP today released the Government's position paper on compensation for loss in the financial services sector.
It should be noted that the area covered by this paper is limited to losses incurred in connection with the provision of financial services. It is not about losses suffered as a result of changes in the value of financial products through, for example, market fluctuations or loss of insurance cover caused by the insolvency of the issuer.
The paper is the second in the Government's review of this area. The first was an issues and options paper in response to which Treasury received 29 submissions, indicating a wide range of views.
The position put in the paper envisages professional indemnity insurance (or
a substitute), with the possibility of exemption for some APRA-regulated entities.
It was framed in the light of current difficulties in the professional indemnity
insurance market.
As well as putting a position, the paper seeks the views of the public on a
number of more specific issues.
The consultation period starts today and will finish on 31 January 2004. The Government welcomes input from stakeholders and the community in developing policy in this area. The government's final position will only be finalised after this consultation process has concluded.
In the light of the consultation period required to determine acceptable compensation arrangements, it is envisaged that the transitional arrangements relating to section 912B of the Corporations Act 2001 will be extended for a further 12 months, to 11 March 2005. That is, they will operate from one year after the full commencement of the Financial Services Reform Act 2001 on 11 March 2004.