In a statement on Thursday, Financial Services Minister Stephen Jones confirmed that the Senate has passed the Compensation Scheme of Last Resort (CSLR), marking the implementation of one of the last outstanding recommendations from the Hayne Royal Commission.
“This is a significant victory for over 2,000 people who have been waiting for a resolution on their cases,” said Mr Jones.
The CSLR is meant to facilitate compensation of up to $150,000 to consumers who have an unpaid determination from the Australian Financial Complaints Authority relating to personal financial advice, credit intermediation, securities dealing and/or credit provision.
“To ensure the CSLR can commence as soon as possible, the government will fund the costs to establish the body that will operate the CSLR, including funding the costs of the first levy period through to the end of the 2023–24 financial year. The scheme will then be funded by industry for future years,” the minister said.
He confirmed that consumers will be able to lodge claims for compensation from April 2024, with the first compensation payments to follow shortly thereafter.
“The Albanese government is committed to strong consumer protections in the financial sector. The successful implementation of the CSLR will further strengthen consumer trust and confidence in Australia’s financial system,” the minister said.
Citing “nine years of Coalition neglect”, the minister added that “Australians finally have a government that puts them first, and the establishment of the CSLR is just one example”.
Earlier this year, Mr Jones disclosed there are approximately 2,000 cases on hold with the Australian Financial Complaints Authority awaiting passage of the CSLR, and that in another 30 cases, compensation has been awarded but can’t be paid until the scheme has been established.
Pushing for its passage in March, he said that “if the CSLR bills are not passed this month, consumers will be waiting until 2024 to receive compensation”.
It is also a win for fraudsters who can steal money from clients and walk away from compensating them, knowing that all good honest advisers who have to fund CSLR will foot the bill. The same advisers who told ASIC about Dixons, are now funding their actions, while those who benefited declare bankruptcy, walk away from their responsibilities and set up shop to do it all over again. Great win Mr Jones, you must be so happy to kick all good honest advisers again.
Another bureaucracy to navigate. What this whole mess needs is its own division within ASIC to manage the lot and to get rid of the product peddlers.
How many small financial planning advisers, businesses and AFSL’s will now be priced out of the industry as they are levied to pay for the misconduct of Evans Dixon and Sterling New Life. The failings of the regulator will be passed on to the very people who are working hardest to remain ethical and advocate for clients.
Money rules the world. Without it what can you do?
Another “Levy” the financial advice community will be facing to bear from 2023/24 and onwards!?
Does that mean the banks are going to compensate advisors $150K for reputational damage and the mess they left the industry in?