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August 2024 levy notice for Compensation Scheme of Last Resort

Credit provision
Financial advice
Credit intermediation

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.