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FIinancial services compensation issues paper released.



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NO.046

FINANCIAL SERVICES COMPENSATION ISSUES PAPER RELEASED

A Federal Government paper on compensation for loss in the financial services sector was released for public discussion today.

The paper discusses issues and options for compensation for loss suffered by clients for any financial product. It includes services for market-traded products, those traded outside formal markets and those for which there is no secondary market.

It also includes financial products which are in the nature of investments as well as products designed to manage risk. It does not, however, cover loss caused by market fluctuations or the failure of the institution that issued the product.

"This is an opportunity to examine from first principles the broad issues involved in compensation arrangements for wrongdoing by financial services licensees," the Parliamentary Secretary to the Treasurer, Senator Campbell, said.

"The aim of the paper is to promote discussion of the basic issues -- the justification and purpose of compensation arrangements in this sector, the occasions when compensation should be payable, the persons on whom the obligation to make such arrangements should fall and the mechanisms available.

"It poses many questions on which the industry participants and the public are encouraged to respond.

"I hope that a wide cross-section of the community will enter into this debate. It is only with the benefit of industry and public experience and input that the Government can form appropriate policy to come to grips with these issues."

The paper is available on the Treasury website (www.treasury.gov.au) and in Commonwealth Government bookshops. There will be a two-month public exposure period.

PERTH 6 September 2002

Contact: Wayne Grant 08 9421 1755 or 0407 845 280

© Commonwealth of Australia 2000