The Compensation Scheme of Last Resort (CSLR) is an important piece of the external dispute resolution framework in Australia.

We can pay compensation to eligible people suffering from financial misconduct. Compensation payments of up to $150,000 can be made.

We're an independent, not-for-profit organisation authorised by the Australian Government to perform our role.

We're not a regulator or government agency.

Purpose, vision and mission

Our mission is to provide a compensation service for eligible consumers, raising confidence in the financial services industry.

Governing principles

Independence

  • We're an independent, not-for-profit company with its own board.
  • We're authorised by the Australian Government to operate the compensation scheme.
  • We're overseen by the Australian Securities and Investments Commission (ASIC).

Effectiveness

  • We're committed to continuous improvement.
  • We have a team of experts dealing with claims.
  • We're committed to cost-effectiveness when completing our work.

Efficiency

  • Our operating model is scalable, sustainable and future-proof.
  • We've built in the ability to meet changing demands, scope and expectations.

Transparency

  • We're committed to sharing data and case studies with our community and stakeholders.
  • By doing so, we aim to build trust and confidence in the financial services industry.

Background and legislation

The framework for operating the CSLR consists of:

The following timeline explains how the framework was created.

  • The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry issued its Final Report.

    A supplementary report (Ramsay Review) included a recommendation to establish the CSLR, which the Government agreed to do.

  • The Government introduced a series of bills to establish the CSLR. These contained critical features of the compensation scheme.

    Consultation on the scheme design included industry and consumers.

  • The Australian Parliament passed legislation establishing the CSLR.

  • The Australian Government formally authorised CSLR Ltd to operate the scheme under section 1060 of the Corporations Act 2001.

What CSLR covers

CSLR covers specific financial products and services delivered to retail clients.

Please see our eligibility page for full details and examples of financial misconduct.

Who funds CSLR?

The Australian Government funded the establishment of CSLR. From April to June 2024, they also funded the first levy period costs.

The ten-largest banking and general/life insurance groups (by income from financial year 2021-2022) pay claims from November 2018 to September 2022. It will also pay claims lodged from July 2024 onwards.

CLSR funding comes from an annual levy on sectors of the the financial services industry.

Learn more about the funding model.

Role of other agencies and regulators

These entities collaborated to establish CSLR and have ongoing roles in the operation of CSLR.

Australian Financial Complaints Authority (AFCA)

AFCA provides a dispute resolution service that assists consumers and small businesses in reaching agreements with financial firms about how to resolve their complaints. It's free for consumers.

Where a consumer has a complaint about a financial product and/or service and believes misconduct has occurred causing them to suffer loss, they can lodge a complaint.

If the complaint cannot be resolved, a final determination may award compensation to the consumer. If the financial firm becomes insolvent before, during or after the AFCA process and the consumer falls within the scope of CSLR, they may be able to make a claim for a compensation payment. 

AFCA also assists us with:

  • estimating costs and fees in the annual levy process
  • providing data about complaints and other determinations where a financial firm can't pay.

Australian Securities and Investments Commission (ASIC)

ASIC oversees conduct within the financial services industry.

It can take action where misconduct has occurred. This can include removing licences from financial firms and banning directors.

ASIC oversees CSLR. It ensures we perform our role and follow legislative and other obligations.

ASIC also determines and collects industry levies. This funds our operations, allowing us to make compensation payments to eligible consumers.

Treasury

Treasury assists the Australian Government in developing government policy that becomes law.