FOI 23-24/034 - Internal Review
Document 2
FOI 23-24/034 - Internal Review
Document 2
Official: Sensitive: Legal
FOI 23-24/034 - Internal Review
Document 2
a)
s47E(d)
b)
s47E(d)
c)
s47E(d)
ASIC’s full submissions are available at
Attachment C. The Treasury Statement and Treasury
email are available at
Attachment D.
5. On balance, it is recommended that you decline the 217 requests.
6. Finance does not consider that there are special circumstances associated with these requests,
including but not limited to the following reasons:
a)
The fundamental causes of the Applicants’ losses are the actions of the s22
responsible entities, and not the actions of the Commonwealth;
b)
There is no unintended outcome from the decision by the Commonwealth not to
introduce a compensation scheme that would cover s22 investors that would give rise
to special circumstances, especially in light of a policy decision not to provide access
to a Commonwealth funded compensation scheme to s22 investors;
c)
It is a matter for individual investors (i.e. not the Commonwealth) to make appropriate
judgments and take personal responsibility for their own superannuation and
investment decisions.
d)
s22
have not provided any evidence of a direct causal link between investor
losses and any action, or omission, by the Commonwealth;
e)
s22 members’ claims do not justify overriding a clear policy intention not to provide
access to Commonwealth funded compensation where s22 members suffered loss,
even where fraud existed; and
f)
There are alternate means of financial support provided by the Commonwealth, which
may be available to the s22 members if they are facing financial insecurity and/or ill
health.
7. A comprehensive statement of reasons explaining your decision to each of the
217 Applicants, and the detailed reasons for it is at
Attachment A. In addition to these arguments
there may be further reasons for declining these requests.
Background:
8. Since February 2020, Finance has received over 970 act of grace requests from s22
relating to thirteen (13) failed investment schemes. The total amount sought across the various
claim groups is approximately $398.2 million. s22
provides advocacy services to businesses
and individuals experiencing financial distress and individuals impacted by financial impropriety.
s22
operates under a fee for service model with the aim of securing compensation for their
clients.
9. Finance has declined act of grace payments for three groups of claimants represented by s22
, for a total of 129 requests to date (s22
). s22
sought internal review of the decisions relating to two of the
failed investment schemes (s22
), both of
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which were declined. The consultation process has recently been completed for requests relating
to the remaining ten schemes. For each claim group, s22
has provided individual impact
statements for most of the members, articulating the individual impact and financial losses. These
statements have been provided to you and considered on their merits. The individual impacts have
been addressed in the 217 statements of reasons.
Act of Grace Process
10. Section 65 of the PGPA Act provides that the Finance Minister, or their authorised delegate,
may authorise an act of grace payment where it is considered appropriate to do so due to special
circumstances. You are a delegate for this purpose (Accountable Authority Instructions refer).
11.
Resource Management Guide No. 401 – Requests for discretionary financial assistance under
the PGPA Act 2013 (RMG 401) provides guidance on situations where an act of grace payment
may be appropriate for a delegate to approve.
12. Some of the relevant considerations, which have been addressed in detail in the reasons,
include whether:
a)
An act of a non-corporate Commonwealth entity (NCE) has caused an unintended and
inequitable result.
b)
Commonwealth legislation or policy has had an unacceptable impact.
c)
The Commonwealth intends to introduce legislation or policy to cover this matter, and
it would be desirable to apply the benefits of this prospectively.
CDDA Scheme
13. s22
’s application was originally prepared for ASIC under the
Scheme for
Compensation for Detriment caused by Defective Administration (CDDA Scheme). ASIC has
advised s22
that it is unable to consider claims of defective administration under the CDDA
Scheme due to the interactions of the CDDA Scheme and its establishing legislation.
14. There is no legal impediment to Finance considering these requests under the act of grace
mechanism.
Consultation:
15. Treasury and ASIC were consulted in relation to this matter. In response:
a)
ASIC provided three submissions in response to the s22
submissions.
b)
Treasury provided the Treasury Statement, a broad statement to Finance covering all
claim groups, and subsequent Treasury email clarifying the status of the proposed
Compensation Scheme of Last Resort.
c)
Treasury and ASIC were provided with two opportunities to fact check relevant
extracts of drafts of the statement of reasons for accuracy.
16. s42
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s42
s22
s22
Director
Claims Support Section
Procurement and Discretionary Payments Branch
19 September 2022
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