CSLR makes first payments
The Compensation Scheme of Last Resort (CSLR) made its first payments to claimants who suffered financial services misconduct, one of which related to mortgage broking.
A Queensland couple was paid $54,050 after being advised by a mortgage broker to take out a loan that was “inappropriate for their circumstances”.
According to the CSLR, the couple were “taken advantage of by a mortgage broker” after the Australian Financial Complaints Authority (AFCA) found that the broker had falsified their projected income.
The complaint was several years old and reportedly took place before the best interests duty was brought in (in 2021).
The couple told the body: “We were misled by a mortgage broker who we trusted as a friend. Believing he was helping us, we soon realised he was profiting at our expense.
“Lacking industry knowledge, we were vulnerable to his deceit and conflict of interest. He got us a mortgage loan by falsifying projected income to secure a loan we couldn’t afford.”
This payment was one of four of the first payments made under the CSLR system, with a total of $360,000 being paid out to claimants.
The CSLR provides up to $150,000 in compensation to eligible consumers who have experienced misconduct by a financial firm and where the firm has not made recompense (generally, due to insolvency).
The financial services arm has been baulking at the burden of compensating clients for the past misdeeds of companies in their sector, with a campaign being mounted in the financial services space to challenge the levy system (see page 10 for more).