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Financial Advice Reforms
Mr Fletcherasked the Assistant Treasurer, in writing, on 11 May 2011:
In respect of the consultation paper Review of compensation arrangements for consumers of financial services: future of financial advice (Richard St. John, April 2011); (a) why does the paper provide little discussion or analysis as to why the Australian Prudential Regulation Authority-regulated superannuation funds are subject to a statutory compensation scheme (provided under Part 23 of the Superannuation Industry (Supervision) Act 1993) yet self managed superannuation funds are not; and (b) will he consider seeking advice and publishing a consultation paper on this important and topical issue, particularly in light of the collapse of Trio Capital Ltd resulting in many investors in self managed superannuation funds losing substantial superannuation savings; if not, why not.
Mr Shorten: The answer to the Honourable Members question is as follows:
(a) and (b) As part of the Future of Financial Advice reforms the Government commissioned Mr Richard St. John to undertake a review to consider the need for, and costs and benefits of a statutory compensation scheme. This review was announced in response to recommendation 10 of the report by the Parliamentary Joint Committee on Corporations and Financial Services Inquiry into financial products and services in Australia.
Mr St. John has since provided his final report on Compensation arrangements for consumers of financial services to the Government. On 8 May the Government released Mr St. John's report for public consultation.
Chapter 3 of that report considers 'compensation following recent licensee failures' including the compensation position of APRA regulated superannuation funds, trustees of SMSFs and of individual investors.
On 16 May the Parliamentary Joint Committee on Corporations and Financial Services publically released their report following an Inquiry into the collapse of Trio Capital. This report also examines the impact on Trio Capital investors and the issue of compensation.
The Government responded to both reports on 26 April 2013.