CSLR eligibility assessment
There are eligibility criteria for who can claim, and only certain financial products and services are covered by the CSLR.
What is covered?
For you to be eligible, your financial firm must have been licensed to provide the following products or services, and your financial loss must be related to one or more of these licensed products and services:
- Personal financial advice – for example, a financial planner gives you inappropriate advice causing financial loss.
- Dealing in securities for retail clients – for example, a stockbroker buys shares for you, resulting in financial loss.
- Providing credit – for example, a credit provider gives you regulated credit you can’t afford.
- Arranging credit – for example, a mortgage broker inappropriately arranges funds for you.
Please note: these examples are illustrative only.
We don’t cover certain financial services and products, including:
- managed investment schemes
- foreign exchange or derivatives trading
- consumer credit insurance
- general insurance
- scams
Legislation defines eligible products and services and is set out in law.
CSLR’s reasonable belief the AFCA determination will not be paid in full
Part of CSLR’s eligibility assessment for claimants who apply for compensation involves CSLR forming a reasonable belief that a claimant is unlikely to be fully paid the amount in accordance with the relevant AFCA determination.
CSLR is sharing this material for financial firms to better understand CSLR’s processes and what CSLR will consider in forming a reasonable belief that a claimant is unlikely to be fully paid the amount in accordance with the relevant AFCA determination.
Importantly, if CSLR pays an amount of compensation to a claimant under the CSLR legislative framework, ASIC must cancel the financial firm’s licence.
The intent of the scheme is to make payments to claimants as a last resort. Accordingly where further engagement between claimants and financial firms or engagement with AFCA or the Court is appropriate, claimants should pursue those avenues before approaching CSLR.
What CSLR will take into consideration
This assessment of ‘reasonable belief’ will be dependent on a range of facts and circumstances including, but not limited to, the following matters:
- the length of time for which the AFCA determination remains outstanding;
- the individual circumstances of the claimant;
- the financial position of the financial firm;
- the steps taken by the financial firm to pay the amount owing under the AFCA determination;
- whether there are events in train which appear reasonably likely to result in the full amount owing under the AFCA determination to be paid; and
- any previous failure by the financial firm to meet agreed payment plans.
CSLR may request evidence in relation to any of the above and may look to independently verify information where appropriate.
Working with financial firms
Consistent with its efforts to raise confidence in the industry, CSLR acknowledges that there may be instances where financial firms are making genuine attempts to pay amounts in accordance with the relevant AFCA determination. In those circumstances, CSLR is keen to work with financial firms and claimants to ensure the full amount under the AFCA determination is paid by the financial which benefits consumers and avoids the mandatory cancellation of the financial firm’s licence by ASIC.
Ineligible claim
CSLR may determine that a claim is ineligible for compensation where it receives written evidence that the claimant has received the full amount in accordance with the relevant AFCA determination.
CSLR will independently verify this information to confirm its accuracy.
Pausing or delaying claims
CSLR may consider pausing the progress of a compensation claim where it receives written evidence of a formal agreement between the financial firm and the claimant prior to CSLR making an offer of compensation to the claimant.
This agreement must provide for the full amount owing under the relevant AFCA determination to be paid within a reasonable timeframe.
Upon receipt of such evidence, CSLR will independently verify the agreement and monitor its performance periodically to ensure compliance.
If CSLR becomes aware of any unreasonable delay or non-compliance with the terms of the agreement, it may form a reasonable belief that the AFCA determination will not be paid.
In such cases, CSLR will notify both the claimant and the financial firm in writing and will likely proceed to make a compensation payment.
Processing claims
If CSLR forms a reasonable belief that the AFCA determination will not be fully paid, CSLR will progress a claim as efficiently as possible. This may occur if the financial firm confirms it cannot pay the full amount.
CSLR will notify the financial firm that it has formed a reasonable belief that the AFCA determination will not be fully paid prior to making an offer of compensation.
Please note: The examples and scenarios presented above are provided for illustrative purposes only. They are not intended to be exhaustive or definitive representations of how we will handle each individual case. Each situation is unique, and the facts and circumstances of each case will differ. As such, the examples should not be taken as a guarantee of any specific outcome.