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Last resort compensation scheme makes first payments  

The Compensation Scheme of Last Resort has paid more than $360,000 to seven victims of financial services misconduct – its first payouts since the industry-funded redress program began on April 2.

A couple from Sydney received $150,000, the maximum allowed under the scheme, after receiving superannuation advice that did not meet their circumstances or goals.

Another Sydney couple whose financial planner gave inappropriate advice on their self-managed super fund were compensated $145,000. 

The other payouts included $50,000 to a Queensland couple who were advised by a mortgage broker to take a loan that was inappropriate for them, and nearly $17,000 to a Sydney man who took out a large loan on the advice of a financial adviser, to invest in a scheme he was told had “guaranteed returns”. 

“This really is a compensation scheme of last resort – these first ... claimants had exhausted all other avenues and waited up to five years for a resolution,” the program’s CEO David Berry said. 

“The scheme is an important part of Australia's consumer protection framework and aims to alleviate the distress of consumers when other avenues for redress are unavailable.” 

The scheme handles compensation claims from victims of financial misconduct relating to personal financial advice, securities dealings for retail clients, and the provision of credit or the arranging of credit. To be eligible, claimants must have experienced financial misconduct as determined by the Australian Financial Complaints Authority. 

The scheme’s website says insurance and broker-arranged policies are not covered.