The Minister for Financial Services and Superannuation has released the Government’s response to the report by the Parliamentary Joint Committee on Corporations and Financial Services on the collapse of Trio Capital (the Trio Report) as well as the report by Mr Richard St. John on Compensation arrangements for consumers of financial services.

The Government accepts the majority of the reports’ recommendations including legislative changes to strengthen the professional indemnity insurance requirements of providers of financial services that deal with retail consumers, changes to improve the communication of risks to investors and to ensure the adequacy of regulatory processes and consultation papers by Treasury on powers to support ASIC in its enforcement role and to improve the governance arrangements of managed investment schemes.

The Government will consult on whether ASIC should have more powers when an AFSL holder changes ownership.

The implementation of the Government’s response will be coordinated by a Superannuation Regulators Working Group, comprised of representatives from Treasury, APRA, ASIC and the ATO.

An industry-funded last resort scheme to compensate consumers impacted by a financial collapse was not recommended by Mr St. John, who noted that at this stage such a scheme would be inappropriate and possibly counterproductive. The Government accepts this recommendation. It will warn SMSF trustees that they do not have the same access to compensation as APRA-regulated funds in the event of theft or fraud.