Banks welcome much-needed CSLR reset

The ABA welcomes the commitment today by the Assistant Treasurer and Financial Services Minister Daniel Mulino to make the Compensation Scheme of Last Resort (CSLR) more sustainable by reducing the losses and costs associated with it.

ABA CEO Simon Birmingham said changes to the CSLR must help contain losses that generate claims and place the scheme on a more sustainable footing.

“It’s been clear for some time that the current scheme is broken and urgent reform is needed,” Mr Birmingham said.

“Banks welcome the Government cracking down on untrustworthy lead generators to prevent consumers from being directed into unsuitable and high-risk financial products.

“The detail of these reforms will be crucial, such as ensuring that new ‘waterfall’ levy arrangements see the parties and sector genuinely responsible for misconduct being the first to pay.

“Banks urge all sides of politics to cooperate in ultimately supporting legislation to reform CSLR, to stem financial losses for consumers, and to reduce costs across the financial industry.”

Mr Birmingham also said the ABA noted the Government’s intention to introduce a new class of adviser as part of its Delivering Better Financial Outcomes package.

“Banks agree that the increasing use of unregulated financial advice, much of it originating on digital platforms, is creating growing risks for Australians,” Mr Birmingham said.

“Bank deposits have grown from $988 billion in 2020 to $1.7 trillion today and those bank account holders deserve to have basic questions easily answered just as super fund and life insurance holders do too.

“The ABA will welcome further engagement with the Government on this new class of adviser, including the need to ensure bank customers ultimately enjoy the same access as those customers of similarly prudentially regulated financial providers.”