ISA welcomes the opportunity to comment on Treasury’s discussion paper regarding the implementation of a compensation scheme of last resort (CSLR).
ISA supports the establishment of a compensation scheme of last resort. It is important to ensure that there is an appropriate level of consumer confidence in the financial services industry and that consumers and small businesses have a means of redress in circumstances where a determination remains unpaid.
The funding arrangements for a CSLR must ensure issues of moral hazard, accountability for wrongdoing and the fairness of who pays for the scheme are properly all addressed. The funding mechanism for CSLR must be risk based and take into account existing protections and not facilitate or underwrite high risk ventures by the nature of its existence.