Labor will boost compensation caps at the Australian Financial Complaints Authority (AFCA), establish an independent retrospective compensation scheme to give past victims of financial services misconduct a chance to pursue justice, and establish a compensation scheme of last resort in financial services.
The stories of bank victims highlight the horrific effect that bank misconduct has had on their lives and they deserve fair compensation.
The current AFCA compensation caps are inadequate. Too many consumers miss out on fair compensation.
Fairer compensation caps
A Shorten Labor Government will quadruple the compensation caps at AFCA for consumers from $500,000 to $2 million, double the compensation cap for small businesses to $2 million, and double the cap for farmers to $4 million.
For the first time, Labor will ensure that victims can get fair compensation for the effect of misconduct on their lives by removing the $5,000 AFCA sub-cap on non-financial loss. When Australians have their lives turned upside down by bank misconduct, they should be able to pursue fair compensation through AFCA.
A retrospective compensation scheme
Labor will establish a retrospective compensation scheme so that past victims of bank misconduct can have one last chance to pursue justice. This scheme will be independent of AFCA and victims of misconduct dating back to 1 January 2008 will be able to apply to have their case heard.
Under Labor, victims will also be able to access compensation with higher AFCA compensation caps through the retrospective compensation scheme.
A prospective compensation scheme of last resort
Labor will establish a prospective compensation scheme of last resort within AFCA. This scheme will be funded by industry and will be used to pay compensation awarded by AFCA where a financial service provider goes bust. Currently, if a victim wins at AFCA but the financial service provider doesn’t pay, they are left with nowhere to go. This is not fair. Labor’s compensation scheme of last resort will ensure that these victims get the compensation they deserve.
Labor will ensure that banks and financial service providers are held to account and pay fair compensation to victims of their misconduct.