The CSLR Board has determined the estimate for the initial levy to fund claims from eligible consumers who have been the victims of financial misconduct.
In a statement the CSLR board says it has “…provided $241 million as the estimate of the cost of meeting compensation claims and costs in relation to complaints that were lodged with AFCA between 1 November 2018 and 7 September 2022. This falls within the annual cap of $250 million as set out in the legislation for the CSLR.”
The board says it is “…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…
“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 board says 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 this estimate with the Federal Register of Legislation. Once 15 parliamentary sitting days has elapsed, 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…
It says 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 board notes 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.
If the financial firm is insolvent and unable to pay the compensation awarded, and all reasonable steps have been taken to seek payment, the consumer can lodge a claim with the CSLR.
It says the initial levy estimate includes provision for the majority of claims involving Dixon Advisory and Superannuation Services (DASS). DASS went into administration in January 2022, prompting a large number of complaints to be lodged at AFCA over subsequent months.
Click here for the full independent report and more information on the estimate.
