Australia’s one-stop dispute-resolution firm has reconfirmed its support for the proposed creation of a compensation scheme of last resort in a submission for the government’s public consultation.
The Australian Financial Complaints Authority (AFCA) said it and its predecessor schemes have long advocated for the industry-funded scheme to fill a major gap in protection for consumers of financial services.
“A compensation scheme of last resort is an important back-stop that ensures that people who have been the victims of misconduct and lost out through no fault of their own can be compensated when the financial firm is unable to pay,” said David Locke, said AFCA chief ombudsman and CEO. “Without this measure there is a significant gap that will cause considerable hardship to consumers who have done nothing wrong, who have suffered financial loss, taken appropriate action through AFCA, only for that outcome not to be honoured by the financial firm.”
Locke said establishing the broad-based compensation scheme will help restore consumer trust and confidence in the financial services sector, and that AFCA will cooperate with the government and stakeholders to implement the reform.
