The Compensation Scheme of Last Resort (CSLR) today met with key financial sector leaders at their inaugural Industry Forum in Sydney. 

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 here, 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