Proposed Compensation Scheme of Last Resort (CSLR)
On 16 July 2021 the Federal Government released the exposure draft legislation to establish the Compensation Scheme of Last Resort (CSLR).
The establishment of the Compensation Scheme of Last Resort will support ongoing confidence in the financial system’s dispute resolution framework by facilitating the payment of compensation to eligible consumers who have received a determination for compensation from the Australian Financial Complaints Authority (AFCA) which remains unpaid.
AFCA welcomes the announcement and reconfirms its support for the creation of a CSLR.
AFCA believes Australia needs a compensation scheme for people who have the right to a remedy for financial misconduct but who are left without redress when a financial firm becomes insolvent.
AFCA looks forward to working with the Government and stakeholders to help implement this important reform.
In April 2020, AFCA paused all complaints against insolvent financial firms while awaiting detail of the scope and timing of a CSLR.
Complaints against insolvent financial firms and other complaints that were on pause while awaiting the introduction of CSLR will continue to be paused and will be assessed once the legislation has come into effect.
AFCA will only be able to fully assess the impact of the CSLR to a complaint when details of the scheme are finalised and legislated by the Government. We will review all relevant complaints as soon as that occurs.
AFCA will contact all parties to discuss the status of paused complaints after that assessment is completed.
More information about the CSLR is available on the Treasury website.