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CSLR levy encourages strong standards says scheme CEO

Mike Taylor3 April 2024
Stick and carrot sign

The inaugural chief executive of the Compensation Scheme of Last Resort, David Berry has said that having the financial services industry fund the scheme via a levy will encourage it to support strong standards.

In a statement announcing the formal opening of the scheme as of yesterday, Berry “acknowledged the financial support that industry was providing to the compensation scheme, through the levies on the sub-sectors covered in the legislation”.

“By having contributions from industry, the scheme will not only be able to compensate eligible claimants but will also encourage industry to support strong standards, enhancing trust and confidence in the financial services sector,” he said.

The Assistant Treasurer and Minister for Financial Services, Stephen Jones said the CSLR would strengthen consumer trust and confidence in Australia’s financial system.

“This scheme will give victims an avenue for redress when things go wrong,” he said.

The CSLR chair, Jo-Anne Bloch noted that previously compensation options were limted and often inaccessible in cases of insolvency.

“Large sums were simply written off, with no chances to recoup the losses,” she said. “The CSLR provides a crucial safety net.”

The announcement of the formal start of the scheme noted that to be eligible for compensation, claimants must have experienced financial misconduct – as determined by the financial services sector ombudsman, the Australian Financial Complaints Authority (AFCA) – related to one or more of the financial products and services covered under the scheme.

“These include matters such as advice on investments, trading stocks or bonds, direct borrowing from a financial company, or assistance with borrowing, such as through a mortgage broker.

“Eligibility is determined through a three-step process:

  1. Lodging a complaint with AFCA about misconduct by a financial firm;
  2. Completion of the AFCA complaint process with the awarding of compensation;
  3. The failure of the financial firm to pay the awarded compensation, which must be reported to AFCA.

Once these steps are completed, consumers can apply for compensation from the CSLR.

CSLR levies will be collected from credit intermediaries, credit providers, licensees providing financial advice, and securities dealers. The levies are calculated by the Australian Securities and Investments Commission (ASIC) in accordance with federal legislation. The CSLR is managed independently and operates under parliamentary legislation. “

Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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Corrupt Canberra
10 days ago

What amount of Funding are Managed Investment Schemes (MIS) contributing to CSLR ? = NIL, ZIP, ZILCH, GOOSE EGGS, YEP NOTHING, NOT A SINGLE $$$ Dollar.
Given failed MIS are the cause of most complaints, eg. Dodgy DIXONS in-house MIS.
Canberra has proven yet again it is TOTALLY CORRUPT.

Jeffrey161
10 days ago

At the end of the day planners voted scomo and the lnp out so perhaps they should take a look at the mess they helped create.

LNP were Evil
10 days ago
Reply to  Jeffrey161

Frydenberg implemented the CSLR off the back of RC.
Frydenberg then exempted MIS from CSLR.
Yep another LNP attack on Advisers.
9 years of Adviser destruction from Frydenberg & LNP.
What did Advisers help create ???

William Mills
10 days ago

What happened to the PI Insurance that Dixons were supposed to have as part of their AFSL obligations?
Has ASIC been negligent in handling the whole Dixon fiasco?

Snookered
10 days ago
Reply to  William Mills

Given they have administrators appointed, I very much doubt they are operating as advice business. Therefore, no PI policy left to claim against. i.e. need to have valid policy in existence before PI claim kicks in. Yes, you are 100% right – those left in industry continually pay to clean up mess of those that made profits and left.

Truth Bomb
10 days ago
Reply to  William Mills

…but were super quick to encourage ex-Dixon clients to lodge their claims before the cut-off date. Strange how they act so differently when someone else (adviser community) is paying.

Harry
8 days ago

The CSLR head seems to be out of touch with main stream thinking. If the regulators were to do their job properly we would not need the scheme. Putting out some spin saying that it will be good for us beggers belief and confirms that we are being lead by people who are completely out of touch.

Edward
8 days ago
Reply to  Harry

True, but can you expect anything else from the person appointed to a plum position doing very little work, adding no value and being paid handsomly for the privilege?