The estimated sum for the initial Compensation Scheme of Last Resort (CSLR) levy will be $241 million, according to its board.
This will be used to fund claims from eligible consumers who have been the victims of financial misconduct and lodged complaints with the Australian Financial Complaints Authority (AFCA) between 1 November 2018 and 7 September 2022. Complaints made from 8 September 2022 onwards will be funded by annual levies.
The initial levy estimate includes provision for the majority of claims involving Dixon Advisory and Superannuation Services (DASS).
April-June 2024 will be funded by the Australian government and July 2024-June 2025 will be funded by relevant sectors of the financial services industry, it said.
The sum was calculated by actuary firm Finity Consulting and reviewed by Taylor Fry.
The CSLR board said: “We are pleased to announce this important milestone as an important step towards the CSLR being able to pay the compensation claims it will start receiving from April 2024.
“This has been a significant undertaking, as this levy is the first of its kind. It was important that we had a robust and rigorous process to be able to make a best estimate based on the best information available.”
The legislation provides Federal Parliament with the opportunity to object to this estimate through a disallowance process. CSLR Ltd has registered the legislative instrument for the estimate with the Federal Register of Legislation.
Once 15 parliamentary sitting days has elapsed, the Australian Securities and Investments Commission (ASIC) will determine the levy for the relevant financial firms and collect the levy on behalf of the Federal Government.
The legislation requires payment of this first, establishing levy by the 10 largest banking and insurance groups as determined by income reported to the Australian Taxation Office for 2021-22.
The funding will pay for compensation claims of up to $150,000 to eligible consumers who have been the victims of financial misconduct relating to personal financial advice, credit intermediation, securities dealing or credit provision. The complaint must also fall within the rules of AFCA and the consumer must have received a determination in their favour which awards compensation.
“Never send to know for whom the bell tolls; it tolls for thee.” (John Donne)
All financial advisers will eventually suffer from regulatory overkill. In the minds of the regulators there is no such thing as being honest and upright.
Make no mistake. ASIC is targeting everyone. Just look at their misguided response to underperforming Choice super funds. Such a meaningless connection!
Just more fees for all of the legitimate financial planners who do the right thing to pay for the fraudulent and dishonest ” financial planners” who don’t seem to be stopped by the plethora of government agencies who are supposed to protect the public. I just don’t understand why I am paying for public service inactivity and inefficiency!
The people who bought me outhave refused to pay the final payment,claiming loss of business….
When i asked for a copyy of the over dues they just went away.
So much moral hazard here it is horrifying… I should’ve been a mortgage broker.