ROOT
Consumer advocates back CSLR fightback
CHOICE has called for the expansion of the proposed CSLR and new regulatory powers for ASIC.
Consumer advocates back CSLR fightback
CHOICE has called for the expansion of the proposed CSLR and new regulatory powers for ASIC.

Ahead of an appearance before the Senate economics committee, consumer advocates have called for the expansion of a new financial compensation scheme.
In the organisation’s formal submission to the committee, CHOICE argued that the proposed compensation scheme of last resort (CSLR) should be amended to better accommodate those impacted by management investment scheme collapses like that of the Sterling First Group.
The Sterling First Group collapsed in late 2019, leaving more than 100 customers facing possible eviction and heavy financial losses.
The saga casts new light on the government’s attempts to follow through on the financial services royal commission’s recommendation that a compensation scheme of last resort be established.

While the federal government originally committed to a scheme that could pay over $540,000 in compensation, the legislation currently before Parliament has reduced that figure to just $150,000. It also excludes those affected by products like managed investment schemes and funeral insurance.
In their submission, CHOICE said that a “broad-based, industry-funded” CSLR that includes managed investment schemes would allow most Sterling Group victims to access compensation but noted that others would slip through the cracks.
“Some people impacted by the Sterling Group collapse, including people who purchased the Silverlink product, may not be eligible for compensation through a broad-based CSLR,” CHOICE admitted.
To remedy this, the consumer advocacy group recommended that the Senate committee investigate alternative means by which these affected individuals could be compensated.
The group warned that a failure to learn the right lessons from the collapse of the Sterling Group would invite the risk of similar scandals in the future.
“Regulatory delay can contribute to further consumer hardship with more consumers being persuaded to invest in harmful products and existing consumers being unaware of their options to exit,” CHOICE said.
To deter this, the group recommended that the Australian Securities and Investments Commission (ASIC) adopt a more proactive approach, issuing public warning notices sooner rather than later.
“ASIC should also use its new product intervention powers to intervene when harmful products such as managed investment schemes emerge or when the sales practice associated with particular managed investment schemes create risk of harm to consumers,” CHOICE said.
The consumer interests group also recommended that ASIC be granted the power to compel financial services licensees to change their conduct by preventing them from taking on new clients, as originally recommended by the banking royal commission.
“A directions power remains a missing link in ASIC’s existing regulatory toolkit. ASIC will be able to become a more proactive and effective regulator if it has a directions power.”
About the author

About the author


Invest
State Street Investment Management holds steady on ETF model portfolio allocations
State Street Investment Management has maintained its asset allocation for its Risk-Based and Target Income ETF Model Portfolios despite market volatility and adjustments by other major players in the ...Read more

Invest
State Street Global Advisors rebrands as State Street Investment Management
State Street Global Advisors has rebranded as State Street Investment Management as the world's fourth-largest asset manager seeks to reflect its growth strategy and strengthen client partnerships. Read more

Invest
North platform launches 'Blend' model portfolios with BlackRock and Lonsec
AMP's North platform has launched a new model portfolio offering called 'Blend' in partnership with BlackRock and Lonsec Investment Solutions, targeting advice practices that want customised ...Read more

Invest
Australian investors add $8.6 billion to managed funds amid global uncertainty
Australian investors demonstrated cautious resilience by adding $8.6 billion to managed funds between January and May 2025, according to new data from Calastone. Read more

Invest
ASX companies gear up for end of financial year reporting season
ASX-listed companies are preparing for the end of the 2025 financial year, with many seizing opportunities to engage with investors through roadshows and industry conferences. Read more

Invest
Digital finance innovation could deliver $19 billion annual boost to Australian economy
Digital finance innovation has the potential to deliver $19 billion in annual economic gains to Australia, according to new research from the Digital Finance Cooperative Research Centre. Read more

Invest
Echelon completes $400,000 acquisition of Northern Territory gas permit
Echelon Resources has completed the acquisition of a 100 per cent interest and operatorship in Exploration Permit EP145 in the Amadeus Basin, Northern Territory, for $400,000. Read more

Invest
Institutional investors return to risk-taking as tariff fears ease
Institutional investors moved back towards risk-taking in late May following delays to trade tariff implementation, according to State Street's latest Institutional Investor Indicators. Read more

Invest
State Street Investment Management holds steady on ETF model portfolio allocations
State Street Investment Management has maintained its asset allocation for its Risk-Based and Target Income ETF Model Portfolios despite market volatility and adjustments by other major players in the ...Read more

Invest
State Street Global Advisors rebrands as State Street Investment Management
State Street Global Advisors has rebranded as State Street Investment Management as the world's fourth-largest asset manager seeks to reflect its growth strategy and strengthen client partnerships. Read more

Invest
North platform launches 'Blend' model portfolios with BlackRock and Lonsec
AMP's North platform has launched a new model portfolio offering called 'Blend' in partnership with BlackRock and Lonsec Investment Solutions, targeting advice practices that want customised ...Read more

Invest
Australian investors add $8.6 billion to managed funds amid global uncertainty
Australian investors demonstrated cautious resilience by adding $8.6 billion to managed funds between January and May 2025, according to new data from Calastone. Read more

Invest
ASX companies gear up for end of financial year reporting season
ASX-listed companies are preparing for the end of the 2025 financial year, with many seizing opportunities to engage with investors through roadshows and industry conferences. Read more

Invest
Digital finance innovation could deliver $19 billion annual boost to Australian economy
Digital finance innovation has the potential to deliver $19 billion in annual economic gains to Australia, according to new research from the Digital Finance Cooperative Research Centre. Read more

Invest
Echelon completes $400,000 acquisition of Northern Territory gas permit
Echelon Resources has completed the acquisition of a 100 per cent interest and operatorship in Exploration Permit EP145 in the Amadeus Basin, Northern Territory, for $400,000. Read more

Invest
Institutional investors return to risk-taking as tariff fears ease
Institutional investors moved back towards risk-taking in late May following delays to trade tariff implementation, according to State Street's latest Institutional Investor Indicators. Read more