The Commonwealth Treasury


COMPENSATION FOR LOSS IN THE FINANCIAL SERVICES SECTOR ISSUES AND OPTIONS September 2002

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Principal issues

It would be appreciated if, in responding to these questions, you particularly address the costs and benefits of your suggestions to consumers, business, government and the community.

1 Can you provide any evidence of the nature and extent of losses suffered by consumers of financial services to assist us to understand the extent of the problem? (page 18)

2 Is requiring compensation arrangements in the financial services sector justified? (page 27)

3 What is the purpose of compensation arrangements which are required by legislation? (page 31)

4 (a) In what circumstances should compensation arrangements be required in relation to a financial services licensee? (page 40)

5 Who should be entitled to claim? (page 42)

Financial services licensees

6 What compensation requirements should be imposed on financial services licensees? (page 48)

7 (a) What, if any, difficulties are being experienced in the financial services sector with the cost and availability of professional indemnity insurance? For example, is run-off cover available? (page 49)

Market licensees

8 Should market licensees continue to be required to make compensation arrangements (as they have in the past and are in Part 7.5)? (page 58)

9 Should prescribed CS (clearing and settlement) facility licensees be required to have compensation arrangements in relation to unauthorised transfers/certificate cancellation or some wider conduct? (page 60)

A broad statutory scheme?

10 Do the financial services industry and consumers consider that a broad statutory scheme is warranted? (page 62)

11 If so: