In an email statement, AIOFP executive director Peter Johnston questioned the Finance Minister’s choice to exclude banks from CSLR obligations.

“Considering losses from managed investment schemes associated with banks and other institutions is the greatest negative issue for consumers over the decades, and 98.5 per cent of all complaints lodged with the Australian Financial Complaints Authority are about poor treatment by banks and other institutions in 2020-21, why would the Minister want them excluded?” Mr Johnston said.

In addition, Mr Johnston questioned the government’s decision to disregard Mr Hayne’s recommendation and change the CSLR commencement date. 

“The CSLR start date of 2009 is to help consumers defrauded by a poorly managed investment scheme, why does the Minister not want to help them? Surely the best interests of consumers comes first?” Mr Johnston said.

Mr Johnston further argued that “trying to force losses” onto an adviser’s PI cover will only inflate premiums – a cost that would inevitably land on the consumer.

“It is time for the banks to be held accountable for their incompetence,” Mr Johnston wrote.

Going a step further, Mr Johnston called for a federal ICAC to investigate “questionable behaviour” that is not in the best interests of consumers.

“The advice community finds it quite ironic that this government imposes an ethics regime [FASEA] on our industry, and the Prime Minister chooses not to impose one on his own team,” Mr Johnston said.

Last week the government introduced legislation into Parliament to establish the financial accountability regime and the compensation scheme of last resort – ticking off the final six recommendations of the Hayne royal commission.

“This is a significant milestone that provides consumers of financial services with greater confidence in Australia’s financial system,” Treasurer Josh Frydenberg and the Financial Services Minister, Ms Hume, said in a joint statement.

The CSLR has also been at the centre of controversy over some of its perceived inadequacies, with consumer groups arguing it could devastate victims of financial scandals and leave them out of pocket.