The Financial Services Compensation Scheme of Last Resort (CSLR) was introduced in April 2024 to facilitate payments of up to $15,000 to eligible consumers who have an unpaid determination from the Australian Financial Complaints Authority.
The CSLR imposes levies on certain sub-sectors within the financial services industry.
Who is subject to the annual levy?
Regulation 6 specifies the sub-sectors subject to the annual levy. These are:
- credit intermediaries, such as mortgage brokers;
- credit providers;
- licensees that provide personal advice to retail clients, such as financial planners; and
- licensees dealing in securities on behalf of retail clients, such as stockbrokers.
When is the CSLR levy due?
The CSLR levy is due within thirty (30) business days after the date of issue. If payment is not made by the due date, a late payment penalty of 20% per annum of the overdue amount will be added each month to the total amount payable.
If the CSLR levy is not paid in full after twelve (12) months, ASIC has the power to cancel your licence and deregister your company.
What happens if you cannot pay the CSLR levy?
You can request that ASIC waive your levies and penalties in exceptional circumstances only. These circumstances may include natural disaster, delays caused by the court, serious illness or death of an officeholder. In order to make a request for a waiver, you will need to login to your ASIC Regulatory Portal account and complete the relevant form. You must also include evidence of the exceptional circumstances to support your request. ASIC will respond with a decision within twenty-eight (28) days of submission of the waiver application.
How is the CSLR calculated?
ASIC will use the industry funding business activity metrics submitted each year to calculate the leviable amount owed for the relevant CSLR period.
Where can I locate the CSLR levy?
The CSLR levy can be viewed and paid on ASIC's Regulatory Portal. ASIC will contact the billing contact listed on the ASIC Regulatory Portal when the levy notice has been issued.
Background
On 22 June 2023, the Australian Parliament passed the Financial Services Compensation Scheme of Last Resort Levy Act 2023 (Cth) for the purposes of providing consumer protection in the Australian financial services sector. The CSLR has imposed eligibility criteria regarding who can claim compensation in favour of an AFCA determination. Only certain financial products and services are covered by the CSLR.
Further Information
- Compensation Scheme of Last Resort
- ASIC Website – Compensation Scheme of Last Resort
- CSLR levy notices
- CSLR penalties
- ASIC (Financial Services Compensation Scheme of Last Resort Levy – Return Deadline) Notice 2023/587;
- Financial Services Compensation Scheme of Last Resort Levy Act 2023 (Cth)
- Financial Services Compensation Scheme of Last Resort Levy Regulations 2023 (Cth)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
