This bill did not become law and is no longer proceeding.
Budget, tax & economy
Consumers can claim up to $150,000 from the last-resort compensation scheme when a financial firm does not pay money ordered by the Australian Financial Complaints AuthorityThe external dispute resolution body whose unpaid compensation determinations can trigger a CSLR payment..
Consumers were left unpaid when a financial firm did not hand over money ordered by the Australian Financial Complaints AuthorityThe external dispute resolution body whose unpaid compensation determinations can trigger a CSLR payment.. This bill funds a last-resort scheme through industry levies so eligible consumers can be compensated, up to $150,000, when firms still do not pay.
After the banking royal commission reform program, the government announced an industry-funded compensation scheme of last resortThe scheme that pays some consumers when they win a dispute against a financial firm but still do not get the money owed to them. in 2021 to deal with cases where consumers won Australian Financial Complaints AuthorityThe external dispute resolution body whose unpaid compensation determinations can trigger a CSLR payment. determinations but still were not paid by failed or non-compliant financial firms. This 2022 levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. bill was introduced to finance that scheme through annual industry charges and help cover compensation of up to $150,000, but after passing the House it was introduced in the Senate and later discharged from the Notice PaperThe Senate's schedule of business; if a bill is discharged from it, the bill is effectively removed from active consideration. in March 2023.
The main criticism is that a broad compensation scheme could expose the financial system to significant costs. Coalition speakers supported the bill but warned that scheme design and scope mattered, including the decision not to include managed investment schemes. Later reporting and government discussion pointed to funding blowouts and sustainability risks rather than broad opposition to compensating consumers.
Stephen Jones MP introduced this bill. Speeches supporting it came from Labor, Liberal Party.
Did it become law?
No
The bill did not complete passage through Parliament.
Final passage
No final passage
The bill has not completed passage and is no longer proceeding.
Time before failure
182 days
From introduction to the final recorded step before the bill stopped proceeding
Meaning
Consumers can claim up to $150,000 from the last-resort compensation scheme when a financial firm does not pay money ordered by the Australian Financial Complaints AuthorityThe external dispute resolution body whose unpaid compensation determinations can trigger a CSLR payment..
A minister-approved not-for-profit companyThe type of organisation the bill says should operate the scheme, so it is run for public purpose rather than profit. must run the last-resort compensation scheme, rather than a profit-making business.
Financial firms in covered parts of the industry would pay an ongoing yearly levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration., with charges raised before the financial year based on expected claims.
LevyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. amounts would be set by regulations and would cover compensation payments, Australian Financial Complaints AuthorityThe external dispute resolution body whose unpaid compensation determinations can trigger a CSLR payment. complaint fees, and the running costs of the scheme operator and ASICThe corporate regulator whose running costs are partly covered by the levy in this bill..
The bill would cap yearly levies at $20 million for each industry subsector and $250 million overall, while letting the minister impose extra levies after unusually large losses or failures.
Where AFCA has made a determination under which a complainant is owed an amount from a financial firm and the financial firm has failed to pay the complainant, the complainant may apply to the operator of the CSLR for payment. If the eligibility criteria are met, the operator of the CSLR must compensate the complainant, up to $150,000.Financial Services Compensation Scheme of Last Resort Levy explanatory memorandum
The Minister may authorise a person to be the operator of the CSLR if the Minister is satisfied the mandatory requirements will be met. This includes that the operator is a company limited by guarantee and not operated for profit.Financial Services Compensation Scheme of Last Resort Levy explanatory memorandum
The CSLR levy framework is designed to establish an ongoing annual levy for entities that fall under a subsector in the scope of the scheme. The framework will issue levies in advance of a financial year, based on expected claims in that upcoming financial year. The first ongoing levy is expected to be issued from January 2024 for the 2024-25 financial year.Minister's second reading speech
The ongoing levy amount in the subsequent financial years for a member of an in-scope subsector will be determined in line with the regulations. The regulations will impose levies on members consistent with the approach applied under the Australian Securities and Investments Commission industry funding model. The levy will factor in compensation amounts payable, associated Australian Financial Complaints Authority complaint-handling fees, and administrative costs of the CSLR operator and ASIC.Minister's second reading speech
The CSLR is designed to be financially sustainable and provide assurance to relevant financial market sectors about the maximum amount expected to be levied. The scheme applies subsector caps of $20 million and an overall scheme cap of $250 million. This limits the amount leviable within a single levy period, whilst maintaining the ability to accommodate any unexpected large-scale events or failures. The levy framework provides the minister with the ability to issue special levies to in-scope and out-of-scope firms, in response to any higher than expected outlays such as a 'black swan' event.Minister's second reading speech
Context
After the banking royal commission reform program, the government announced an industry-funded compensation scheme of last resortThe scheme that pays some consumers when they win a dispute against a financial firm but still do not get the money owed to them. in 2021 to deal with cases where consumers won Australian Financial Complaints AuthorityThe external dispute resolution body whose unpaid compensation determinations can trigger a CSLR payment. determinations but still were not paid by failed or non-compliant financial firms. This 2022 levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. bill was introduced to finance that scheme through annual industry charges and help cover compensation of up to $150,000, but after passing the House it was introduced in the Senate and later discharged from the Notice PaperThe Senate's schedule of business; if a bill is discharged from it, the bill is effectively removed from active consideration. in March 2023.
Treasury releases CSLRThe scheme that pays some consumers when they win a dispute against a financial firm but still do not get the money owed to them. draft legislation for consultation
Treasury released consultation material for a compensation scheme of last resortThe scheme that pays some consumers when they win a dispute against a financial firm but still do not get the money owed to them., including draft levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. legislation and papers on scheme design.
Treasury ↗Government introduces the levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. bill for the compensation scheme
The bill was presented in the House to create the levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. framework that would fund payments when firms failed to comply with AFCAThe external dispute resolution body whose unpaid compensation determinations can trigger a CSLR payment. compensation orders.
Parliamentary timeline ↗Minister says the bill will fund the CSLRThe scheme that pays some consumers when they win a dispute against a financial firm but still do not get the money owed to them.
In his second reading speech, the Assistant Treasurer said the bill was one of the measures establishing the levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. framework for the Compensation Scheme of Last ResortThe scheme that pays some consumers when they win a dispute against a financial firm but still do not get the money owed to them..
Hansard ↗House passes the bill
The House agreed to the bill at third reading, sending the levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. measure on to the Senate as part of the broader financial services reform package.
Parliamentary timeline ↗Senate receives the levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. bill
The bill was introduced and had its second reading moved in the Senate, extending the parliamentary push to set up the industry-funded compensation scheme.
Parliamentary timeline ↗Senate discharges the bill from the Notice PaperThe Senate's schedule of business; if a bill is discharged from it, the bill is effectively removed from active consideration.
This step halted the bill's progress in that form, leaving the proposed levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. framework unfinished at that point.
Parliamentary timeline ↗Legislative route
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
The bill reached this recorded parliamentary step.
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Second reading agreed to
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Third reading agreed to
Referred to Committee (28/09/2022): Senate Economics Legislation Committee; Committee report (24/10/2022)
Referred to committee
APH bill page notesThe bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
The bill reached this recorded parliamentary step.
Key criticism
The main criticism is that a broad compensation scheme could expose the financial system to significant costs. Coalition speakers supported the bill but warned that scheme design and scope mattered, including the decision not to include managed investment schemes. Later reporting and government discussion pointed to funding blowouts and sustainability risks rather than broad opposition to compensating consumers.
No party represented in the debate opposed the bill, but cost and scheme-design risks later became more visible.
Costs could spread far beyond the firms at fault
Coalition speakers warned that a broad-based scheme could expose the financial system to significant costs. Debate also noted that managed investment schemes were not included in the bill, because including them could make costs difficult to manage.
Long-term funding may be unstable
A second concern is that the scheme's costs may outrun its original caps and assumptions, forcing special levies, benefit cuts or redesign. Later reports described sharp levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. increases, funding gaps and questions about the scheme's long-term viability after major investment-fund collapses.
Further sources
Votes
No recorded votes were found before this bill stopped proceeding.
Parliamentary debate
Start here — lead voices
Stephen Jones supports the bill, saying it sets up the levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. framework for the compensation scheme of last resortThe scheme that pays some consumers when they win a dispute against a financial firm but still do not get the money owed to them. and creates an ongoing annual levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. to fund it.
Read in Hansard ↗James Stevens supports the bill, saying the compensation scheme of last resortThe scheme that pays some consumers when they win a dispute against a financial firm but still do not get the money owed to them. will help victims of financial misconduct recover money when the guilty firm has become insolvent.
Read in Hansard ↗McAllister supports the bill as part of the levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. framework for the Financial Services Compensation Scheme of Last ResortThe scheme that pays some consumers when they win a dispute against a financial firm but still do not get the money owed to them. and explains how the first-year and ongoing levies will be calculated and collected.
Read in Hansard ↗Taylor says the opposition will not block the compensation scheme bill and will support it, but wants scrutiny of the scheme because a broad-based version could expose the financial system to significant costs.
Read in Hansard ↗All speeches by bloc
2 speakers · 3 contributions · 2 support
“This Bill is one of two Bills which form the levy framework for the financial services Compensation Scheme of Last Resort.”Read the full speech in Hansard ↗
Hansard records 2 separate contributions by Stephen Jones on this bill. They are grouped here so the speaker is listed once.
Minister's second reading speech
Stephen Jones supports the bill, saying it sets up the levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. framework for the compensation scheme of last resortThe scheme that pays some consumers when they win a dispute against a financial firm but still do not get the money owed to them. and creates an ongoing annual levyA compulsory charge on financial firms used here to fund compensation payments and the scheme's administration. to fund it. He argues the scheme is designed to be financially sustainable and capped so the costs are predictable for the financial sector.
“This bill is one of two bills which form the levy framework for the financial services Compensation Scheme of Last Resort, hereafter 'the CSLR'.”Read this contribution in Hansard ↗
Second reading speech
Jones supports the bill and says it is needed to establish the compensation scheme of last resortThe scheme that pays some consumers when they win a dispute against a financial firm but still do not get the money owed to them., which will help consumers get unpaid financial compensation determinations paid. He argues it will build trust in the financial system and should be funded by industry.
“There's been quite some discussion about the Compensation Scheme of Last Resort, and I'd like to reiterate and clarify a few matters that have come up in the course of the debate. The government continues to build trust in Australia's financial system's external dispute resolution framework and remains committed to improving consumer outcomes. Establishing, for first time, the Compensation Scheme of Last Resort, or the CSLR, implements recommendation 7.1 of the banking royal commission. In doing so, it delivers on one of the key outstanding recommendations of the banking royal commission but also, as the member for Curtin alluded to in her address, the earlier Ramsay review under the former government.”Read this contribution in Hansard ↗
3 speakers · 3 support
“This compensation scheme of last resort creates a fund from this one-off levy for when people get a determination of financial misconduct and that's not very helpful if the entity has perhaps become insolvent or gone bankrupt in the meantime and there's no money for that guilty party to meet the determination against them.”Read the full speech in Hansard ↗
“I have a couple of comments to make on the financial services compensation of last resort scheme. We introduced this legislation to facilitate the payment of compensation to eligible consumers who have received a determination from the Australian Financial Complaints Authority, AFCA, which remains unpaid. This forms part of the first tranche of the legislation to implement the government response to the Hayne royal commission.”Read the full speech in Hansard ↗
“I'm pleased to see the measures in this bill and I hope that, through this continuous process of improving the regulation in the financial services sector, we see a sector that is better run and more focused on the needs of consumers in our society and in our community.”Read the full speech in Hansard ↗
Record
House · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
House · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
House · Second reading debate
Second reading debate
The bill reached this recorded parliamentary step.
House · Second reading agreed to
Second reading agreed
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
House · Third reading agreed to
Third reading agreed
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Senate · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Senate · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Senate · Discharged from Notice Paper
Discharged from Notice PaperThe Senate's schedule of business; if a bill is discharged from it, the bill is effectively removed from active consideration.
The bill reached this recorded parliamentary step.
Senate Economics Legislation Committee; Committee report (24/10/2022)
Referred to committee
Referred to Committee (28 Sept 2022): Senate Economics Legislation Committee; Committee report (24 Oct 2022)
APH bill page notes
