The bills that will establish the compensation scheme of last resort (CSLR) for the financial services sector have been introduced into parliament this week.
Specifically, the CSLR will become a part of the Australian financial services landscape through the Treasury Laws Amendment (Financial Services Compensation Scheme of Last Resort) Bill 2023, Financial Services Compensation Scheme of Last Resort Levy Bill 2023 and Financial Services Compensation Scheme of Last Resort Levy (Collection) Bill 2023.
The introduction of the CSLR will mean compensation amounts resulting from an Australian Financial Complaints Authority determination that remain unpaid by the financial institution in question will ultimately be settled.
The establishment of the scheme and its initial stages of operation will be funded by the government, with the CSLR’s ongoing existence to be financed through a levy imposed on certain sectors of the financial services industry.
The Financial Services Council (FSC) welcomed the development, which it described as evidence of the government’s commitment to implementing the remaining recommendations from the Royal Commission into the Banking, Superannuation and Financial Services industry.
“The Assistant Treasurer has got the balance right with the CSLR scheme, which will provide consumers with a safety net of up to $150,000 for eligible unpaid Australian Financial Complaints Authority determinations,” FSC chief executive Blake Briggs noted.
“The CSLR will establish an industry-funded scheme to protect consumers who have incurred losses, while not excessively burdening customers and well-run organisations that have done nothing wrong with the costs of the scheme.
“The aim is for the CSLR to be genuinely last resort through effective enforcement of existing laws to minimise the potential cost of the scheme to consumers and industry.”
The CSLR will come into being on the first day after the two bills introduced into parliament today receive royal assent.
The operator of the scheme has the ability to make compensation payments to eligible consumers after the commencement of the first levy period.
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