This petition relates to our proposed ‘Government Consumer Protection Insurance Scheme’ which, if implemented, would effectively insulate future financial consumers from wrongdoings by banks and financial advisors. In time, it would lead to less malpractice by financial institutions, less litigation, less money wasting exercises by government (Senate inquiries), certainty where compensation is concerned. In fact, the advantages of such a scheme are endless.
We see the GCPI scheme working this way:
1. This Government Department would handle all aspects of Consumer Protection Insurance including providing “consumer protection insurance” cover and handling all claims relating to such.
It could be an off-shoot of ASIC or stand alone. Either way, it would relieve ASIC of a great deal of its current workload.
2. The Department would be funded in part by the fees it charges for providing consumer protection insurance cover. It could also be funded by penalties imposed on the financial sector and the banking industry by the Government.
Fines such as the $700 million dollars the CBA has to pay out could be allocated to the set-up costs of this Department and future fines and penalties for misconduct by the banking industry and financial sector (financial advisers) could also go towards this Department’s operating costs.
3. The fees that this Department would impose for issuing a consumer protection insurance cover would be split between the consumer and the banking industry or financial sector on, say a 50/50 basis, or a split to be agreed.
The cost would be a fair one for both the consumers and the financial sector.
4. The Department would issue a ‘Government Consumer Protection Insurance Cover’ to all consumer credit customers of banks and clients of financial advisers.
If an individual or a business is the victim of any deceptive, fraudulent business practice, or contractual breach that takes place during a financial transaction, that individual or business could then lodge a claim with this Department.
5. The Department’s legal experts would consider the merits of any claim it received and be empowered under the law to decide whether compensation should be paid and the amount of that compensation.
The department’s legal team would be permanent staff members rather than being seconded in from outside legal firms. They would also be experts in consumer laws, if not at the start of their tenure, certainly at the end of such.
6. The claimant would be paid the amount determined by the Department’s legal team after handing down its Decision if that Decision were favourable.
This means that the claimant would not have to wait for an outcome through the courts if the alleged offender opted to go to Court rather than abide by the Decision of the Department’s legal team. If the Department were then awarded by the Court, on behalf of the claimant, an amount of compensation greater than the sum they had already paid out to the claimant, the difference between the amount already paid and the amount subsequently awarded would be paid retrospectively to the claimant.
7. The Decision by the Department would be made and the claimant informed within 6 months of the complaint having been lodged with the Department.
One of the key issues at the moment is the amount of time it takes to process claims through the normal channels. In most cases, we are talking years rather than months and this is completely unacceptable.
8. If the offending party did decide to Appeal the Department’s decision, all costs from that point would be for the account of the Department, the offender or both depending upon the Court’s decision
The Department’s legal team would have two main functions: (1) to establish the merits in law of each individual claim that the Department received and decide on a compensation sum, (2) to prosecute every case to finality through the courts, where the alleged offender did not agree with their Decision, in order to establish legal precedents for the future. By so doing, this would strengthen consumer laws or identify weaknesses or loopholes in our consumer laws that need re-drafting. Settlements, once legal action has commenced, would not be countenanced for these reasons.
9. If the alleged offender successfully Appeals the Decision of the Department, then all legal costs, including the original payout to the claimant, will be absorbed by the Department.
That is a risk that any underwriter takes although the government, for the most part, will recover most of what it lays out and make a tidy profit besides. On the other hand, if the alleged offender loses their Appeal, then that person or organization will have to pay a set sum for the costs incurred by the Department plus the amount of the compensation that was awarded by the Court to the client.
• It would offer a fair, reasonable, free-of-charge, independent, and speedy determination for any consumer that has a genuine complaint.
• It would reduce the number of cases of this nature that are being litigated every year through the court system, thereby alleviating the burden on our legal system.
• It would stop banks with their power and money from being able to bully consumers into submission.
• It would ensure that consumer laws would be entrenched in law through precedent rather than remaining uncertain because offenders (mostly banks) have settled beforehand to avoid just that.
• It would force the offenders (mostly banks) to comply with our consumer laws because they would have the government to reckon with rather than their own consumers if they didn’t.
• It would provide additional revenue to the government because insurance of this kind always generates a profit due to it being a blanket cover paid by many but only a few will ultimately claim against.
• It would ensure that justice is dispensed to all rather than the few that can afford to take legal action.
• It would obviate the need for consumers to rely on the professional indemnity insurance that financial advisers need to take out.
• It would dry up litigation because fewer banks would be willing to go to court, knowing that the monetary clout they had in the past, that forced claimants to settle, would now count for nothing.
• It would ensure that thousands of consumers in this country, many of whom are elderly selffunded retirees, would not be left destitute. No longer would they be left in a position of helplessness; not having the money to sue the reprobates in our society that target them because they are seen as easy marks.
• It would mean that the control the banks now exert over consumers through the ABA and the banking codes would be negated because banks would now have to argue their case with the Government rather than a bunch of disgruntled consumers.
• It would motivate the government to pursue the wrongdoers in the financial sector because it would be in their best interests.
• It would remove the need for consumers with a complaint to employ lawyers because the Department would be recovering the amount of their claim, not them.
• It would lead to a stronger banking system because banks would be inclined to take less risks.
• It would restore public confidence in our financial institutions.
RUSSELL COUSINS - FOUNDER OF BANKVICTIMS