The Compensation Scheme of Last Resort (CSLR) held its first Industry Forum in Sydney on Oct. 23, bringing together leaders from the financial sector to review the scheme’s progress since its launch in April.
CEO David Berry shared updates, noting that since the scheme began, 91 claimants had received a total of $9.1 million in compensation.
“These claimants who previously had no opportunity to recover the loss from their experience with financial misconduct have now been able to access some form of compensation,” he said.
The CSLR is currently working with consulting actuary Finity to develop the levy estimate for Levy Period 3, covering the financial year 2025-26 (FY26). The estimate is expected to be tabled in Parliament when it reconvenes in early 2025.
The upcoming levy is anticipated to exceed the $20 million cap for personal financial advice, with the final estimate dependent on the number of complaints referred by the Australian Financial Complaints Authority (AFCA) and any large-scale failures in the sector.
Berry said that the process of determining the levy is complex, involving factors such as the volume of complaints AFCA resolves that may be referred to the CSLR and the timing of these complaints.
During the forum, the CSLR also shared common themes of financial misconduct observed in complaints involving personal financial advice. These included:
In securities dealings, issues such as misclassifying investors and not acting in the client’s best interest were highlighted.
Berry emphasised that while most firms comply with industry standards, CSLR’s role is to focus on cases where misconduct occurs.
He also highlighted CSLR’s commitment to working with government bodies, including the Australian Securities and Investments Commission (ASIC), AFCA, and Treasury, to provide early insights and ensure the scheme functions as intended under its legislative framework.
In related news, AFCA reported a record 105,454 complaints for the 2023-24 financial year, reflecting a 9% increase over the previous year.
The report noted that scams and comprehensive motor vehicle insurance were among the key drivers of the rise in complaints. Scam-related complaints surged by 81%, reaching 10,951 cases.
Meanwhile, complaints about comprehensive motor vehicle insurance increased by 21%, surpassing home building insurance as the most complained-about product in general insurance. Delays in claim processing were cited as a recurring issue.
