Senate to spearhead whistleblower protections

Senate committee to publish paper discussing greater need for whistleblower protection.


By Sarah Kendell

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The Senate Economic References Committee would publish a discussion paper on the need for greater protections for whistleblowers in financial services and was also actively considering a victims compensation scheme of last resort, committee chairman Sam Dastyari said yesterday.

Speaking at a Macquarie Graduate School of Management event, Dastyari said the paper would be the first element in opening up a public debate on the need for whistleblower protection.

“Most people who work in the industry support the need for improvements to protection because if you do a ‘where are they now’ on past whistleblowers for many of these scandals, they’ve often gone through a huge amount of pain and suffering afterwards,” he said.

“What we are trying to do now is get the public on board about the need for it.”

He mentioned the committee would hold a summit in February next year with industry stakeholders to determine how the changes might go forward.

“Under the US model, whistleblowers get a percentage of the regulator fine that is issued to the financial institution as their reward, but we’re not sure that would gel with the Australian ethos,” he said.

He said he expected the Australian system to be more conservative, aiming to even out the provisions made for whistleblowers in the public service versus the private sector.

“This will be a game changer for people coming forward,” he said.

He also said many of the major banks had been supportive of the idea of a compensation scheme of last resort for victims of fund mismanagement, which would protect those who had previously “slipped through the cracks” if their adviser had no professional indemnity insurance.

“While this wouldn’t apply to bank customers as the liability would fall to the institution in that case, the banks understand that the commentary around these victims who have lost everything and have no avenue of compensation affects the whole industry,” he said.

Currently, victim activist groups hold a lot more sway in parliament than the more sophisticated lobby groups representing financial services companies purely because their stories are so powerful.

By implementing a capped scheme that was only available to individuals, the industry could limit the public fallout from advisers doing the wrong thing, Dastyari said.

“Rather than the UK scheme, which is uncapped and has been subject to rorting by companies, we would look to cap the total compensation to around $250,000 to $350,000 per victim,” he said.

He said he also expected more public outcry about the industry to occur in 2016 as many of the home repossessions related to the collapses of failed forestry investment schemes Timbercorp and Great Southern fell due.

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