The Government has introduced into the House of Representatives the Financial Sector Reform Bill 2022 and the Financial Services Compensation Scheme of Last Resort Levy (Collection) Bill 2022 to establish a Compensation Scheme of Last Resort (CSLR) to support the financial system external dispute resolution framework. Background.
UPDATE: The Bills were passed by the House of Representatives on 28 September 2022 and will be sent to the Senate.
The CSLR will facilitate the payment of compensation of up to $150,000 to eligible consumers who have a determination from the Australian Financial Complaints Authority (AFCA) relating to personal financial advice, credit intermediation, securities dealing and credit provision which remains unpaid.
The Government will contribute towards the costs of the scheme in its first year of operation, which is proposed to commence from 1 July 2023. The scheme will be fully industry funded through a levy on relevant financial service and credit licensees in the subsequent years of the scheme’s operation.
The Government has also released for consultation exposure draft regulations to support the operation of the CSLR legislation. The draft regulations specify matters relating to the CSLR operator’s reporting requirements and identify persons upon whom a levy will be imposed. The draft regulations also outline the methods that underpin the calculation for the amount of levy payable and how they differ based on the type of levy being imposed.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
