Explanatory Memorandum
(Circulated by authority of the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP)General outline and financial impact
Financial services compensation scheme of last resort and levy framework
Outline
Together, the Treasury Laws Amendment (Financial Services Compensation Scheme of Last Resort) Bill 2023, the Financial Services Compensation Scheme of Last Resort Levy Bill 2023 and the Financial Services Compensation Scheme of Last Resort Levy (Collection) Bill 2023 establish the CSLR.
The CSLR is intended to support confidence in the financial system's external dispute resolution framework. The scheme provides for compensation to be paid to a consumer where a determination issued by AFCA remains unpaid and the determination relates to a financial product or service within the scope of the scheme. The Commonwealth will fund the establishment of the scheme and part of its initial operation. A levy will be imposed on parts of the financial services industry to fund the scheme's ongoing operation.
Date of effect
The establishment of the CSLR and the supporting levy framework commences on the day these Acts receive the Royal Assent.
The operator of the scheme can begin to make compensation payments to eligible consumers after the commencement of the first levy period.
Proposal announced
This proposal was announced on 4 February 2019 as part of the former Government's response to the Financial Services Royal Commission.
Financial impact
The estimated financial costs of the CSLR are indicative and dependent on a number of key factors including the scheme commencement date and AFCA complaint consideration processes. All figures in this table represent amounts in $m.
| 2022-23 | 2023-24 | 2024-25 | 2025-26 |
| -2.7 | 0.5 | -0.1 | -1.6 |
Human rights implications
Treasury Laws Amendment (Financial Services Compensation Scheme of Last Resort) Bill 2023 raises human rights issues. See Statement of Compatibility with Human Rights - Chapter 3 of this Explanatory Memorandum.
The Financial Services Compensation Scheme of Last Resort Levy Bill 2023 does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 3 of this Explanatory Memorandum.
The Financial Services Compensation Scheme of Last Resort Levy (Collection) Bill 2023 raises human rights issues. See Statement of Compatibility with Human Rights - Chapter 3 of this Explanatory Memorandum.
Impact Analysis
The Financial Services Royal Commission Final Report has been certified as being informed by a process and analysis equivalent to an Impact Analysis for the purposes of the Government decision to implement this reform. The Financial Services Royal Commission Final Report can be accessed through the Australian Parliament House website. [1]