Victims of collapsed dodgy financial companies are outraged at a federal government proposal to slash the amount of financial compensation available to them through a compensation scheme of last resort, or exclude them completely.
Many have lost all or most of their retirement savings to financial scandals and have expressed devastation and disappointment at the proposal to cap compensation at $150,000; and not to cover compensation for financial scandals in areas like managed investment schemes and funeral insurance, despite recommendations from the Banking Royal Commission.
The government had originally committed to a compensation cap of $542,500.
"When the government released its response to the royal commission, it gave victims of financial scandals hope that they would finally be compensated," said consumer group Choice chief executive Alan Kirkland. "For many victims, those hopes have now been dashed."
A submission to Treasury co-signed by nine consumer groups - Choice, the Consumer Action Law Centre, Financial Counselling Australia, the Financial Rights Legal Centre, Super Consumers Australia, the WA and SA Consumer Credit Legal Services, the Indigenous Consumer Assistance Network and the Victorian Aboriginal Legal Service - also urged an increase to the compensation cap and called for compensation to victims of debt management firms, managed investment schemes and providers of funeral expense policies.
Choice also believes the proposals for a financial accountability regime will make it easy for financial scandals to happen in the future by letting finance executives who oversee scandals off the hook.
To present legislation that is watered down, ineffective and will exclude thousands of victims is a devastating blow," Mr Kirkland said. "We know from past experience that times of economic crisis provide fertile ground for scams and misconduct.
"To present legislation that is watered down, ineffective and will exclude thousands of victims is a devastating blow," Mr Kirkland said. "We know from past experience that times of economic crisis provide fertile ground for scams and misconduct."
Victims of the collapsed Sterling First investment scheme in Western Australia feel let down.
Seniors from across the country signed up for the managed investment scheme product, paying more than $100,000 to secure long-term leases over rental properties. When the company went into liquidation, more than 100 customers were left out-of-pocket and facing eviction.
Annette Taylor, a 69-year-old from WA, lost her entire nest egg of $220,000 and now lives on the age pension. "It's just shocking, and the government has done absolutely stuff-all to help us," she said. "It has destroyed me. I just want the money back and to get on with my life."
Older people are watching
Advocacy group Combined Pensioners and Superannuants Association is calling on the federal government to honour the recommendations of the Banking Royal Commission and set the proposed scheme of last resort compensation cap at $540,000.
The group also wants to see funeral and managed investment scheme fraud compensable.
"The royal commission envisaged that victims of all manner of fraud involving financial products would be compensable, but the government is excluding funeral insurance and managed investment schemes," said policy manager Paul Versteege.
"These are both areas where consumers have suffered at the hands of unscrupulous operators.
The royal commission envisaged that victims of all manner of fraud involving financial products would be compensable, but the government is excluding funeral insurance and managed investment schemes," said policy manager Paul Versteege.
"The Morrison government has called two royal commissions affecting older people - one into aged care, one into financial malfeasance - and the government should realise that older people are watching what it is doing with the recommendations from both royal commissions in the lead up to next year's federal election."