The Australian Financial Complaints Authority has had to pause 2447 complaints, involving claims worth around A$376 million, because the firms involved are insolvent.
AFCA reported that there are 44 financial firms involved in the complaints – all of them “impacted by insolvency”.
On top of that, there were 306 unpaid determinations worth $14.7 million associated with 28 insolvent firms.
The firms involved in the paused complaints include 14 financial planners, six managed investment scheme operators, four funeral insurance providers, four securities dealers, two derivatives dealers, two foreign exchange dealers and one corporate adviser.
The two foreign exchange dealers account for the biggest claims, worth a total of $266.8 million.
The Morrison government introduced a bill last year to establish a Financial Services Compensation Scheme of Last Resort but it had not passed when the election was called and has lapsed.
The proposed scheme would have provided compensation to consumers where they had an Australian Financial Complaints Authority determination in their favour and where the relevant financial institution had not paid the consumer in accordance with the determination.
It was a controversial bill, with critics arguing that it set the compensation cap too low, court and tribunal rulings were not covered and managed investment schemes were not included.
Labor members of the Senate Economics Legislation Committee wrote a dissenting report when the committee reviewed the bill earlier this year. While the committee recommended that the bill be passed the dissenting report recommended that its shortcomings be addressed.
If the bill re-emerges it is likely to be in quite a different form.