Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697640753688.pdf (Australia)
Financial Accountability Regime Bill 2021 [Provisions] and Financial Services Compensation Scheme of Last Resort LevyBill 2021 [Provisions] and related billsSubmission 1 Financial Accountability Regime Bill 2021 [Provisions] and Financial Services Compensation Scheme of Last Resort Levy Bill 2021 [Provisions] and related bills – Senate Inquiry Submission by Sterling First Action Group (December 2021) Table of Contents About Us .......................................................................................................................................................3 Affiliations ...................................................................................................................................................................3 Our Response & Recommendations .........................................................................................................4 List of Recommendations ...........................................................................................................................................4 Eligibility for compensation payments ........................................................................................................................5 Amount of compensation payments ...........................................................................................................................6 Appendix 1 – Survey on CSLR Draft Legislation .....................................................................................8 Survey Results ...........................................................................................................................................................8 Feedback Received* ................................................................................................................................................ 13 Appendix 2 – AFCA Referrals Timeline .................................................................................................. 14 References ................................................................................................................................................ 18 2 Financial Accountability Regime Bill 2021 [Provisions] and Financial Services Compensation Scheme of Last Resort LevyBill 2021 [Provisions] and related billsSubmission 1 Financial Accountability Regime Bill 2021 [Provisions] and Financial Services Compensation Scheme of Last Resort Levy Bill 2021 [Provisions] and related bills – Senate Inquiry Submission by Sterling First Action Group (December 2021) About Us The Sterling First Action Group initially began as a Facebook group, following the collapse of the Sterling Group of entities in May 2019.
The group was originally intended to be a place where all victims of the Sterling Group collapse could exchange views, discuss how the collapse had impacted them, and to share information.

The group is managed/administrated by a committee of volunteers who have been affected, be it directly or indirectly (i.e., family members acting on behalf of elderly parents).

In the 2½ years since the collapse, the Sterling First Action Group has continued to support victims.
This has included assistance with preparation of AFCA complaints and proof of debt lodgements with insolvency administrators; lobbying local, state, and federal MPs; submission of questions to be raised at the PJC on Corporations & Financial Services (September 2019, February 2020, July 2020, March 2021, June 2021); submissions to the Treasury (March 2021 on the Review of the Australian Financial Complaints Authority, August 2021 on the proposed Compensation Scheme of Last Resort), and raising awareness through the media.
Most recently we made a submission to the Senate Inquiry into the Sterling Income Trust, including appearing as witnesses at the public hearing on 16 November 2021.

In preparation for previous submissions, we have conducted a variety of short online surveys of victims who suffered financial losses associated with the collapse of the Sterling Group.

These survey were designed to show the amount invested by victims and highlight the impact of the proposed CSLR compensation cap of $150,000 per claimant.
This data will be referenced throughout this submission, with a full copy of the survey results available in the Appendix.

The majority of Sterling Group victims have lodged complaints with AFCA, either against Theta Asset Management Ltd (victims with investments in the Sterling Income Trust), or Libertas Financial Planning Pty Ltd (victims with investments in Sterling Corporate Services and the Silverlink Investment Company).
Affiliations In June this year we became aware of a campaign being mounted by consumer advocacy group, CHOICE, calling on the Federal Government to establish the Compensation Scheme of Last Resort (CSLR) as a top priority.

As our objectives were identical, the Sterling First Action Group and CHOICE mutually agreed to cooperate and align our campaigns.

Since that time, we have been in regular contact and have contributed a variety of materials to their media campaigns.
We have continued to work closely with Senator Louise Pratt, who has repeatedly raised concerns about the Sterling Group and its subsidiaries during Senate proceedings and had used her time to question ASIC in the PJC on Corporations & Financial Services on many occasions.
3 Financial Accountability Regime Bill 2021 [Provisions] and Financial Services Compensation Scheme of Last Resort LevyBill 2021 [Provisions] and related billsSubmission 1 Financial Accountability Regime Bill 2021 [Provisions] and Financial Services Compensation Scheme of Last Resort Levy Bill 2021 [Provisions] and related bills – Senate Inquiry Submission by Sterling First Action Group (December 2021) Our Response & Recommendations We thank the Senate Economics Legislation Committee for the opportunity to provide a submission to the Inquiry and give permission for our submission to be made public.
In responding to the Explanatory Memorandum, we have elected to focus on key areas we believe the proposed financial services compensation scheme of last resort (CSLR) will most impact Sterling Group victims.

As such, our submission will concentrate solely on the Financial Sector Reform (Hayne Royal Commission Response No.

3) Bill 2021.

List of Recommendations RECOMMENDATION 1.1 Scope of the CSLR to include managed investment schemes.

CSLR scope to be clearly prescribed in primary legislation.
RECOMMENDATION 1.2 If the previous recommendation is not viable, eligible AFCA cases and unpaid determinations associated with managed investment schemes that arose between 1 November 2018 and before scheme establishment, to be funded as part of the one-off ‘accumulated unpaid determinations’ levy.

RECOMMENDATION 2.1 Align CSLR compensation limits with AFCA claim limits.

Ensure prescribed CSLR compensation limits are indexed accordingly to increase and remain aligned with AFCA claim limits in the future.
RECOMMENDATION 2.2 If the previous recommendation is not viable, CSLR compensation limits to be set at 80% of the maximum AFCA claim limit (i.e., the maximum compensation to be paid is 80% of the current AFCA limit of $542,500 for direct financial loss).

Ensure prescribed CSLR compensation limits are indexed accordingly to increase and remain aligned with AFCA claim limits in the future.
RECOMMENDATION 2.3 If the previous recommendation is not viable, CSLR compensation limits to be aligned with APRA Financial Claims Scheme limit of $250,000.

RECOMMENDATION 3 Scope of the CSLR to include disputes where misconduct is proven by AFCA investigation (irrespective of the financial product and/or service involved).

RECOMMENDATION 4 Current and prospective members of AFCA to provide a copy of their current PI insurance policy to be deemed eligible for an AFCA membership.
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