The Treasury Laws Amendment (Financial Services Compensation Scheme of Last Resort) Bill 2023 together with Financial Services Compensation Scheme of Last Resort Levy (Collection) Bill 2023 and
Financial Services Compensation Scheme of Last Resort Levy Bill 2023 has been passed by both houses of parliament and is awaiting Royal Assent.
UPDATE: The Acts were assented to on 3 July 2023.
UPDATE: The Corporations Amendment (Financial Services Compensation Scheme of Last Resort) Regulations 2023 were registered on 6 July 2023.
The FSCLR Bills were passed separately from the Financial Accountability Regime Bills which are still awaiting passing by the Senate.
The CSLR will facilitate compensation of up to $150,000 to consumers who have an unpaid determination awarding monetary compensation that has been made in their favour from the Australian Financial Complaints Authority relating to personal financial advice, credit intermediation, securities dealing and/or credit provision.
The establishment of the CSLR and the supporting levy framework commences on the day these Acts receive the Royal Assent.
To ensure the CSLR can commence as soon as possible, the Government will fund the costs to establish the body that will operate the CSLR, including funding the costs of the first levy period through to the end of the 2023-24 financial year. The scheme will then be funded by industry levies for future years.
The operator of the scheme can begin to make compensation payments to eligible consumers after the commencement of the first levy period.
Consumers will be able to lodge claims for compensation from April 2024, with the first compensation payments to follow shortly thereafter.
The maximum compensation that may be payable under a relevant AFCA determination is $542,500.
When the relevant AFCA determination is for an amount greater than the CSLR compensation cap (that is, more than $150,000), the excess is not compensable under the CSLR.
Instead, this excess remains a debt owed by the relevant entity to the consumer, which the consumer can pursue via other means outside of the CSLR.
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Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.