1st and 2nd levy period estimates

A summary of levies to assist entities in calculating the leviable amount can be viewed on the ASIC website.

The information collected from the Industry Funding annual return will be used for the calculations of levies. ASIC is responsible for calculating each leviable entity’s share of the total levy in accordance with the prescribed regulations.

ASIC will issue levy notices and collect levy payments on behalf of the Government.

In accordance with the Legislation and statutory obligations, CSLR has determined the estimates, having due regard to actuarial principles and in cooperation with suitably qualified and industry recognised experts.

CSLR has not deviated from the estimates determined in the report from the Principal Actuary, independent consultancy, Finity Consulting. CSLR reasonably believes, noting the prudent and realistic assumptions made by the Principal Actuary, that the estimates accurately reflect the expected total cost of the compensation payments to be issued and the associated costs of operating the scheme during the 1st and 2nd levy periods.

It is further noted that a Reviewing Actuary, independent actuarial consultant Taylor Fry, also endorsed the methodology and analysis used, and the determinations made, by the Principal Actuary.

CSLR Actuarial Policy

CSLR has adopted and implemented a Policy for Determination of Estimates for the First and Second Levy Periods, to ensure an appropriate framework and governance structure has been incorporated into the determination process which reflects its obligations under the legislation.

Independent estimate modelling and report

CSLR engaged the services of the Principal Actuary to undertake the detailed modelling and analysis, ensuring compliance with legislative requirements and confidence in the estimates.

The Principal Actuary’s recommendations were:

• 1st levy period estimate of $4.8 million
• 2nd levy period estimate of $24.1 million

A full copy of the report is available to provide transparency of the estimates modelling and assumptions.

Finity is Australia’s largest actuarial consulting firm. Their actuarial services are provided by over 150 professionals with deep domain knowledge across the financial services industry, and the private and public sectors. They bring experience working with other compensation arrangements, and across other Commonwealth and State Government schemes.

Taylor Fry has worked alongside government and industry across Australia and New Zealand for more than 20 years, providing quality assurance and tailored actuarial and analytics advice. Drawing on a wealth of market understanding and expertise, the independent consultancy has developed many long-standing relationships, including with compensation schemes – and most recently with the ARPC – by supporting leaders to make sound, evidence-based decisions.

CSLR has been working closely with ASIC and the Government to establish the scheme. Each entity has a different legislated role:

• CSLR is authorised by the Minister to determine the total estimate for the levy period to meet eligible claims and costs.
• AFCA investigates complaints and determines if financial misconduct has occurred and the amount of compensation that should be made if substantiated.
• ASIC applies the formula set out in the regulations to determine the levy share for each entity, issue levy notices and collect levy payments on behalf of the Australian Government.

1st levy period estimate

The Australian Government fund the 1st levy period and it follows a different legislative process.

• The notifiable instrument is registered on the Federal Register of Legislation, managed by the Office of Parliamentary Counsel. This formally notifies the Minister and Parliament of the estimate.
• Government provides the funds to CSLR, so it can commence operations and pay compensation claims to eligible consumers.

2nd levy period estimate

The legislation requires certain steps must take place before ASIC is able to issue the levy notice.

• Levy instrument and explanatory memorandum registered on the Federal Register of Legislation managed by the Office of Parliamentary Counsel.
• Instrument tabled in each House of Parliament.
• A ‘Disallowance period’ of 15 days for each House of Parliament needs to be satisfied.
• ASIC calculates levy share for each entity based on the legislative requirements.
• ASIC issues individual levy notices to each entity.
• ASIC collects the payment on behalf of the Australian Government.
• Government then provides the funds to CSLR.