The Compensation Scheme of Last Resort (CSLR) has today released the FY2027 initial levy estimate.

The Compensation Scheme of Last Resort (CSLR, the Scheme) has today published its Initial Levy Estimate for FY2027.

With assistance from independent actuaries, and in alignment with the relevant legislation, the Initial Estimate for FY2027 has been calculated at $137.5m.

These funds will facilitate the CSLR processing of 912 claims as outlined in the FY2027 initial estimate.

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The Compensation Scheme of Last Resort (CSLR) has today released its submission to Treasury’s post-implementation review into the Scheme.

Additionally, the Scheme has published its FY2025 Impact Report, along with a comprehensive list of all firms against which it has paid compensation since it began operations.

Lodged in March 2025, the CSLR’s response to the PIR details a holistic reflection of the observations it made during the first nine months of operation, focusing on the following key areas:

• Ongoing effectiveness and sustainability of the Scheme
• Providing support to the victims of financial misconduct
• The challenges of the current CSLR funding structure, and;
• Addressing industry practices to enhance consumer trust in the financial services sector.

The submission also outlines a series of recommendations, informed by practical experience and strategic insight, for the Minister’s consideration.

These recommendations aim to strengthen the long-term sustainability of the Scheme by addressing key challenges and identifying opportunities for meaningful improvement.

“The CSLR looks forward to the outcome of the PIR and remains committed to working collaboratively with government and industry stakeholders, said CSLR CEO David Berry.

Our shared goal is to ensure the Scheme continues to meet its legislative obligations, as we balance the impact of levies on industry while serving as a vital support for consumers impacted by financial misconduct.”

The CSLR’s submission to the PIR can be accessed on its website.

The Scheme is also pleased to advise that its 2025 Impact Report is now available to read on the CSLR website.

Alongside fulfilling its legislative reporting obligations under the Corporations Act 2001 (Cth) and Corporations Regulations Act 2001 (Cth), the 2025 CSLR Impact Report includes key metrics and observations from the Scheme’s first full 12 months of operation.

The report includes multiple claimant narratives, demonstrating how instances of financial misconduct by industry outliers inflict widespread harm on consumers.

A comprehensive financial report for the FY2025 is also included within this document.

To underscore the rate and scale of misconduct, the CSLR has released a detailed list of all financial firms against which it has made compensation payments since commencing operations in April 2024.

The list, published on the CSLR’s website, will be updated monthly, outlining the firm name, sub-sector, number of compensation payments and the total amount of compensation paid against each firm.

“Having now been in operation for 18 months, and in consultation with industry associations, it’s time to share what we are seeing and highlight the impact these outlying firms have on both the sector and consumers,” said Mr. Berry.

The CSLR’s submission to the PIR, the FY2025 Impact Report, and the comprehensive list of firms that the Scheme has made compensation payments against can be found at the CSLR website.

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The Compensation Scheme of Last Resort (CSLR) has today released the FY26 revised levy estimate.

The need for a revised estimate was triggered due to the initial levy estimate, issued in January 2025, exceeding the $20m sub-sector cap for the personal financial advice sub-sector.

With the assistance of CSLR’s principal actuary, the revised estimate for the 2026 financial year has been calculated at $75.698m, down from the initial estimate published in January of $77.975m.

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The claim volume originally estimated in December 2023 is expected to eventuate, however, claims have taken longer than anticipated to reach the CSLR, and will be received in FY26.

More precise details can be expected after the conclusion of the financial year.

CSLR CEO, David Berry, explains that beyond DASS, the CSLR has seen multiple large-scale firm failures within the personal financial advice sector, with at least two of these failures potentially leading to more than 800 claims.

“These failures continue to significantly impact the amount of compensation likely to be paid in the coming financial years. The key driver to the timing of payments remains the speed at which the CSLR receives claims.”

“The projected underspend will be utilised to pay compensation in subsequent financial years and be offset against the FY27 levy estimate,” Mr Berry said.

In line with a lower number of claims paid, the CSLR operating costs are tracking below the levy estimate.

The CSLR continues to focus on ensuring eligible victims of financial misconduct are supported in line with its legislative mandate.

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The CSLR operates under legislation created with bipartisan support to administer unpaid determinations made by the Australian Financial Complaints Authority (AFCA).

CSLR operates in a manner which is effective, efficient and economical with the goal of increasing consumer trust across the financial services sector.

With the assistance of independent external actuaries, the initial levy estimate for the upcoming financial year has been calculated at $77,975,000.

These funds will facilitate CSLR processing 1800 claims across the Pre CSLR levy and the FY26 levy estimate and the payment of compensation for 491 claims in relation to the FY26 levy estimate. This amounts to a three-fold increase in processing volume relative to FY25.

Of the $77.9m estimate, $70.11m is attributed to financial advice, $2.80m to credit provision services, $2.72m to credit intermediaries and $2.34m to the securities dealing sub-sector.*

The actuarial report – ‘FY26 initial levy estimate’ can be found on our website.

A more detailed license and authorised representative breakdown can be found on the ASIC website.

David Berry, CEO of CSLR says “In line with our administrative function, we have, with the assistance of external actuaries, calculated the initial levy estimate for FY26.  As previously foreshadowed in October 2024, the estimate exceeds the $20m sub-sector cap for personal advice.

The key contributors driving the expected number of claims are attributed to Dixon Advisory & Superannuation Services and United Global Capital.”

ASIC are only authorised to levy up to $20 million at a sub-sector level.

The amount above $20m will require funding via a special levy with formal notification of this requirement to be made to the Minister for Financial Services early in FY26. Consistent with the legislation, CSLR will complete a revised levy estimate for FY26.

The consideration of any special levy will be determined by the Minister and subject to separate parliamentary approval.

* Excerpt taken from FY26 initial levy estimate – table 1.1 

Mr Berry expressed concern at the number of victims of financial misconduct, the harm suffered at the hands of a relative few and the impact this has on the reputation of an entire industry.

“We will continue to work closely with industry, Treasury, ASIC and the Minister’s office as we fulfil our legislative responsibilities alongside building greater trust amongst consumers in the financial services sector.”

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In keeping with its commitment to transparency, the CSLR provided an overview of its progress since the scheme launched in April 2024, and the roadmap for the next six months. 

“It has been rewarding to have paid 91 claimants ($9.1M) in compensation in our first five months of operation. These claimants who previously had no opportunity to recover the loss from their experience with financial misconduct have now been able to access some form of compensation,” CSLR’s CEO David Berry said.  

Levy Period 3 (FY26)

The CSLR shared some of the key assumptions that will be relied upon as it embarks on the complex process, with consulting actuary Finity, to formulate the estimate for levy period 3 (FY26). The total levy estimate is expected to be lodged with Parliament when it resumes sitting early next year. 

The CSLR anticipates the upcoming levy will exceed the $20M sub-sector cap for personal financial advice. The process of confirming the levy estimate is complex and heavily dependent on, 

• the estimates of how many complaints will be resolved by AFCA and proceed to the CSLR in FY26; and, 
• the inclusion of any other large scale firm failures.

Whilst the total amount in relation to Dixon post the Pre CSLR allocation is unlikely to change significantly this amount will likely be spread over multiple levy periods depending on the timing of complaints being resolved with AFCA and people subsequently lodging a claim with the CSLR.

In addition, the CSLR outlined common themes it has observed.

Common themes of misconduct in relation to personal financial advice

• Inappropriate linking of SMSF and borrowing to invest in property​
• Misleading, deceptive advice or unauthorised transactions​
• Failure to implement a Statement of Advice​
• Failing to regularly review investment strategies ​
• Advice provided without considering personal situations​
• Failure to disclose material information​

Common themes of misconduct in relation to securities dealing 

• Misclassification of sophisticated investor​
• Failure to follow instructions​
• Failure to act in clients best interest​

“Within the financial sector we recognise the majority do the right thing and at the CSLR we see the small proportion that undermine the strength of the whole sector.  Where we can, we are committed to updating the industry on what we know about future levies as well as providing insights we have gleaned from the claimant’s experience with the sector,” Mr Berry said.

The CSLR also reiterated its commitment to working closely with Treasury, ASIC, AFCA and the Minister in providing early insights into the operation of its legislative framework. 

“While we continue to fulfill our legislative obligation to provide some basic consumer protections, our focus remains on ensuring the CSLR is well positioned to build consumer trust in the financial services industry,” Mr Berry said.

About the Compensation Scheme of Last Resort

The Compensation Scheme of Last Resort (CSLR) is an industry-funded scheme offering protection to individuals harmed by the actions of financial institutions. It ensures that eligible individuals, following a determination awarding compensation from the Australian Financial Complaints Authority (AFCA), receive compensation of up to $150,000. 

The CSLR’s primary objective is to provide redress to claimants who have secured a favourable determination from AFCA yet have not received compensation from the financial firm generally due to insolvency. 

The CSLR is managed independently and operates under parliamentary legislation. It is a vital part of Australia’s financial ecosystem, stepping in to provide relief to victims of financial misconduct, who may otherwise struggle to obtain compensation.

Additional information:

CSLR’s Impact Report is available, including key metrics and observations from the first three months of operation, case studies and a comprehensive Financial Report.

Media contact: media@cslr.org.au

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The Compensation Scheme of Last Resort (CSLR) 2nd levy period notice will be issued by the Australian Securities and Investments Commission (ASIC) in early August 2024.

As outlined in the legislation for the CSLR, the 2nd levy period is payable by the sub-sectors of the financial services industry that are covered by the CSLR.

It is the responsibility of the CSLR to determine estimates that it reasonably believes to be the cost of claims that will be made and costs administer the scheme in each year. The Australian Securities and Investments Commission (ASIC) will issue the levy for each financial firm and collect the levy payments.

CSLR provided a 2nd levy period estimate of $24.1 million in March 2024. The estimate falls within the scheme’s annual levy cap of $250 million and within $20 million subsector cap.

This estimate is expected to meet eligible compensation claims and scheme operating costs from 1 July 2024 to 30 June 2025. The estimate for each sub-sector is:

• Financial advice $18.5 million
• Credit provision $1.5 million
• Credit intermediation $1.8 million
• Securities dealing $2.3 million.

A summary to assist entities in calculating the leviable amounts per entity can be viewed on the ASIC website. ASIC will issue the levy notices shortly to licensees/organisations.

CSLR has been engaging with industry associations widely to build awareness of the upcoming levy notice and share how the estimate is calculated for each subsector.

The estimate is based on actuarial principles, as required by legislation. CSLR engaged the services of a leading actuarial consultancy, Finity Consulting, to conduct detailed modelling and analysis for each estimate. This work was reviewed by a second, independent actuarial consultancy, Taylor Fry. Detailed information on how the estimate is determined is available in the report from Finity here.

CSLR will continuously monitor the number of claims received against our actuarial estimates and provide updates to the industry.

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CSLR Chief Executive, David Berry, said three of the claimants lived in suburban Sydney (Sutherland Shire; Northern Beaches and the Hills District), with the fourth residing on Brisbane’s western outskirts.

“Whilst the financial services industry works toward the betterment of their clients it’s unfortunate that there are a small few who take advantage of the trust bestowed on them. Ensuring some basic consumer protections works to lift trust in the financial services industry and the professions that support it.

“This crucial safety net for victims of financial services misconduct is now in place and those who have experienced financial loss through no fault of their own are being compensated.

“This really is a compensation scheme of last resort – these first four claimants had exhausted all other avenues and waited up to five years for a resolution.

“The CSLR claims team has been moved by the joy expressed by the scheme’s first claimants, some of whom were in quite desperate financial straits,” Mr Berry said.

The CSLR provides up to $150,000 in compensation to eligible consumers who have experienced misconduct by a financial firm and where the firm has not made recompense generally due to insolvency.

To be eligible for compensation, claimants must have experienced financial misconduct – as determined by the financial services sector ombudsman, the Australian Financial Complaints Authority (AFCA) – related to one or more of the financial products and services covered under the scheme.

“The scheme is an important part of Australia’s consumer protection framework and aims to alleviate the distress of consumers when other avenues for redress are unavailable,” Mr Berry said.

“In turn, its existence will support confidence in the financial services sector.”

One of the first four payouts was over $50,000 to a couple from Queensland who were advised by a mortgage broker to take out a loan that was inappropriate for their circumstances.

A couple from Sydney’s south received about $145,000 following inappropriate personal financial advice provided by their financial planner relating to a self-managed super fund.

Another couple from Sydney’s Hills District was paid $150,000 in compensation after receiving superannuation advice., AFCA ruled that the advice was not tailored to reflect the couple’s circumstances or goals. The risks were also poorly explained to them, and the advice failed to consider alternatives.

A man from Sydney’s Northern Beaches received just under $17,000 in compensation after taking out a large loan on the advice of his financial adviser to invest in a scheme he was told had “guaranteed returns”.

CEO David Berry, also said it was important to acknowledge the financial support that industry was providing to the compensation scheme, through the levies on the sub-sectors covered in the legislation.

“Industry contributions ensure the scheme will both compensate eligible claimants but also encourage industry to back stronger standards, which enhances confidence and trust in the financial services sector,” David said.

“It is important to note that the vast majority of people in the financial services industry act ethically and in the best interests of their clients.

“The CSLR is a genuine last resort for misconduct only, not for poor performing investments or people who ignore good advice and take undue investment risks.”

CSLR levies will be collected from credit intermediaries, credit providers, licensees providing financial advice, and securities dealers. The levies are calculated by the Australian Securities and Investments Commission (ASIC) in accordance with federal legislation. The CSLR is managed independently and operates under parliamentary legislation.

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The MoU reflects the parties’ intention to maintain a proactive, open and collaborative relationship to effectively perform their respective functions as defined by legislation.

CSLR is committed to transparency and the MOU can be viewed here. The MoU has been signed by Chief Executive Officer of Compensation Scheme of Last Resort Ltd, David Berry and AFCA’s Chief Ombudsman and Chief Executive Officer David Locke.

“CSLR and AFCA have distinct but connected roles in the external dispute resolution framework. To support victims of financial misconduct, it is vital we have clear and transparent procedures in place to support effective and efficient outcomes.” Mr Berry said.

“The CSLR and AFCA have clearly defined, and distinct roles governed by our respective legislation and rules,” Mr Locke said. “Consultation and cooperation will be important in effectively discharging our responsibilities.”

CSLR is an industry-funded scheme offering protection to individuals harmed by the actions of financial institutions. We provide redress to claimants who have secured a favourable determination from AFCA, yet have not received compensation from the financial firm generally due to insolvency. The CSLR is managed independently and operates under parliamentary legislation. It is a vital part of Australia’s financial ecosystem, stepping in to provide relief to victims of financial misconduct, who may otherwise struggle to obtain compensation.

AFCA is an independent, not-for-profit ombudsman service for the financial services sector. Its external dispute resolution service helps consumers and small businesses resolve complaints with financial firms in banking and finance, investments and advice, insurance and superannuation.

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The CSLR will provide up to $150,000 in compensation to eligible consumers who have experienced misconduct by a financial firm, where the firm has not made recompense due to insolvency. 

The scheme is now an important part of Australia’s consumer protection framework and aims to alleviate the distress of consumers when other avenues for redress are unavailable. In turn, its existence will support confidence in the financial services sector.

Commenting on the launch, inaugural CSLR Chair Jo-Anne Bloch said:

“Previously, compensation options were limited and often inaccessible in cases of insolvency”. 

“Large sums were simply written off, with no second chances to recoup the losses. The CSLR provides a crucial safety net,” Ms Bloch said.

Inaugural CSLR CEO David Berry said:  

“People left without redress for misconduct suffer both financial and emotional stress.  

“Our task is to ensure that those who have experienced financial loss through no fault of their own receive recompense, in line with the legislation that underpins our work.”

Mr Berry acknowledged the financial support that industry was providing to the compensation scheme, through the levies on the sub-sectors covered in the legislation. 

“By having contributions from industry, the scheme will not only be able to compensate eligible claimants but will also encourage industry to support strong standards, enhancing trust and confidence in the financial services sector,” Mr Berry said.

“We are focused on delivering a scheme that operates efficiently, economically and effectively,” he assured industry.

“The Compensation Scheme of Last Resort will strengthen consumer trust and confidence in Australia’s financial system,” said the Hon Stephen Jones MP, Assistant Treasurer and Minister for Financial Services. 

“The compensation scheme of last resort will strengthen consumer trust and confidence in Australia’s financial system. 

“This scheme will give victims an avenue for redress when things go wrong. 

“The government stands with consumers to ensure there are robust protections in place for them. 

“The government ensured that the Hayne Royal Commission was established and is proud to implement one of its final recommendations,” continued the Assistant Treasurer. 

To be eligible for compensation, claimants must have experienced financial misconduct – as determined by the financial services sector ombudsman, the Australian Financial Complaints Authority (AFCA) – related to one or more of the financial products and services covered under the scheme. 

These include matters such as advice on investments, trading stocks or bonds, direct borrowing from a financial company, or assistance with borrowing, such as through a mortgage broker. 

Eligibility is determined through a three-step process: 

1. Lodging a complaint with AFCA about misconduct by a financial firm; 
2. Completion of the AFCA complaint process with the awarding of compensation; 
3. The failure of the financial firm to pay the awarded compensation, which must be reported to AFCA. 

Once these steps are completed, consumers can apply for compensation from the CSLR. 

CSLR levies will be collected from credit intermediaries, credit providers, licensees providing financial advice, and securities dealers. The levies are calculated by the Australian Securities and Investments Commission (ASIC) in accordance with federal legislation. The CSLR is managed independently and operates under parliamentary legislation. 

For media enquiries, please contact: 

• media@cslr.org.au
• Benjamin Haslem at 0408 887 742
• Rania Aissaoui at 0457 609 877

About the Compensation Scheme of Last Resort

The Compensation Scheme of Last Resort (CSLR) is an industry-funded scheme offering protection to individuals harmed by the actions of financial institutions. It ensures that eligible individuals, following a determination awarding compensation from the Australian Financial Complaints Authority (AFCA), receive compensation of up to $150,000. 

The CSLR’s primary objective is to provide redress to claimants who have secured a favourable determination from AFCA, yet have not received compensation from the financial firm generally due to insolvency. 

The CSLR is managed independently and operates under parliamentary legislation. It is a vital part of Australia’s financial ecosystem, stepping in to provide relief to victims of financial misconduct, who may otherwise struggle to obtain compensation.

For more information, visit: https://www.cslr.org.au/ 

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