A bipartisan Senate committee reviewing proposed legislation for the Compensation Scheme of Last Resort (CSLR) has released its findings, backing the financial redress program despite reservations from some stakeholders and also Coalition Senators on the committee.

“The committee recognises the concerns raised by stakeholders within the financial services sector regarding the proposed CSLR,” the Senate Economics Legislation Committee says in its report.

“While the committee acknowledges these concerns, it is reassured that Treasury has engaged in an extensive consultation and design process with industry, and that this process has produced a rational framework that addresses those concerns.”

The committee, chaired by Labor Senator Jess Walsh, said in the report it is “persuaded” by the evidence from Treasury and other submitters in the financial services sector who articulated their support for a forward-looking industry funded CSLR.

Financial advisers and planners have long flagged their concerns that the planned compensation scheme in its current format will not provide redress for all products and services that fall under the jurisdiction of the Australian Financial Complaints Authority (AFCA).

The CSLR – recommended by the Ramsay Review in 2017 and later backed by the Hayne royal commission – aims to provide compensation where an AFCA determination remains unpaid and the determination relates to a financial product or service within the scope of the scheme.

Additional comments from Coalition Senators provided in the report flagged a number of concerns they have with the CSLR.

They say the bills “do not increase the accountability for financial misconduct, but rather disperses the risk across the entire financial system”.

“Increasing the level of financial regulation without taking into account the need to enforce the existing rules already on the books is a never-ending strategy,” they said.

They say the scheme establishes an “enormous moral hazard” for consumers, the market and regulator, citing supporting evidence provided by the Financial Services Council.

Bills for the CSLR and the Financial Accountability Regime are now before the Senate, having progressed through the House of Representatives with a moved third reading.

The Senate referred the provisions of the bills to the Committee for inquiry and to report by this month.