This bill became law on Jul 3rd, 2023.
Budget, tax & economy
Financial firms covered by later levy years must pay this levy if they were in a regulated part of the market during the earlier qualifying yearThe earlier year used to decide which firms are in scope for a later levy year..
People left unpaid after successful financial complaints exposed a gap: Australia had no compensation scheme of last resort for some financial services failures. This bill makes the financial services industry fund that scheme through a levy, with rules for who pays and when.
Australia had strengthened financial regulation after the banking royal commissionThe major inquiry whose reforms this bill is part of finishing., but people who won determinations from the Australian Financial Complaints AuthorityThe complaints body that makes binding decisions about many finance disputes, which this scheme picks up if the firm still does not pay. could still go unpaid when a financial firm failed, leaving no last-resort compensation scheme for some losses. The 2023 levy bill responded by creating an industry-levy mechanism to fund that missing backstop, and after Parliament passed the package and Royal AssentThe final approval that turns the bill into an Act of Parliament. was given, the scheme had a statutory funding base.
The main criticism was that an industry-funded last-resort scheme could grow into a costly cross-subsidyA situation where firms that did not cause the problem end up helping pay for it through the levy., with levies rising sharply and being passed on to firms and ultimately consumers who were not responsible for the original misconduct. That concern was raised cautiously by Coalition speakers during debate and later reinforced by reporting on funding blowouts, but no party represented in the debate opposed the bill itself.
Stephen Jones MP introduced this bill. It passed on the voices.
Did it become law?
Yes
Became law 03 July 2023
Final passage
Passed without a counted vote
Members called out ‘aye’ or ‘no’ — no individual votes were recorded.
Passage speed
117 days
From introduction to the latest recorded parliamentary step
Meaning
Financial firms covered by later levy years must pay this levy if they were in a regulated part of the market during the earlier qualifying yearThe earlier year used to decide which firms are in scope for a later levy year..
Businesses charged under this law must pay the levy themselves, creating the industry-levy funding mechanism for the compensation scheme.
The law caps the total levy across all covered financial sectors at $250 million in any one levy yearThe yearly charging period for the industry levy that funds the scheme..
The minister can start the first levy yearThe yearly charging period for the industry levy that funds the scheme. on a chosen future day, giving government flexibility over when industry charging begins.
Regulations will decide which financial market sectors pay the ongoing yearly levy and how ASICThe regulator that will work out some levy notices and help administer how the charge is collected. works out each levy noticeThe formal notice telling a firm how much levy it must pay..
(1) Levy is imposed on a person for the second levy period or a later levy period if, at any time during the qualifying period for the levy period:Financial Services Compensation Scheme of Last Resort Levy Act 2023 final Act text
Levy imposed on a person for a levy period is payable by the person.Financial Services Compensation Scheme of Last Resort Levy Act 2023 final Act text
(1) The total amount of levy that may be imposed for any levy period across all persons across all sub‑sectors must not exceed $250 million.Financial Services Compensation Scheme of Last Resort Levy Act 2023 final Act text
(2) The Minister may, by notifiable instrument, determine a specified day to be the day that the first levy period starts (which must not be before the day the determination commences).Financial Services Compensation Scheme of Last Resort Levy Act 2023 final Act text
The financial market subsectors that will pay the ongoing annual levy will be detailed in regulations. The regulations will also detail the methodology to be applied by ASIC in its calculation of levy notices.Minister's second reading speech
Context
Australia had strengthened financial regulation after the banking royal commissionThe major inquiry whose reforms this bill is part of finishing., but people who won determinations from the Australian Financial Complaints AuthorityThe complaints body that makes binding decisions about many finance disputes, which this scheme picks up if the firm still does not pay. could still go unpaid when a financial firm failed, leaving no last-resort compensation scheme for some losses. The 2023 levy bill responded by creating an industry-levy mechanism to fund that missing backstop, and after Parliament passed the package and Royal AssentThe final approval that turns the bill into an Act of Parliament. was given, the scheme had a statutory funding base.
Parliament resumes unfinished banking royal commissionThe major inquiry whose reforms this bill is part of finishing. reforms
Speeches on the earlier 2022 version presented the compensation scheme and levy bills as part of finishing reforms flowing from the banking royal commissionThe major inquiry whose reforms this bill is part of finishing..
Hansard ↗Government introduces the levy bill to fund a last-resort compensation scheme
The minister said the bill would create the levy framework to fund the Financial Services Compensation Scheme of Last ResortThe backstop scheme that pays some consumers when a financial firm has lost and still does not pay what it owes..
Hansard ↗Government says unpaid AFCAThe complaints body that makes binding decisions about many finance disputes, which this scheme picks up if the firm still does not pay. determinations need a backstop
In the Senate, the second reading speechThe main debate speech in which a member explains why they support or oppose the bill. said the package would compensate consumers who had suffered losses and already held a relevant AFCAThe complaints body that makes binding decisions about many finance disputes, which this scheme picks up if the firm still does not pay. determination in their favour.
Hansard ↗Parliament passes the bill
Both houses agreed to the levy bill in the same form, completing the legislative step needed to make industry fund the scheme.
Parliamentary timeline ↗Royal AssentThe final approval that turns the bill into an Act of Parliament. makes the levy framework law
Royal AssentThe final approval that turns the bill into an Act of Parliament. turned the bill into an Act, giving the compensation scheme a formal statutory funding base.
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 bill reached this recorded parliamentary step.
Referred to Federation Chamber
The bill reached this recorded parliamentary step.
Second reading debate
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 bill reached this recorded parliamentary step.
Reported from Federation Chamber
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Third reading agreed to
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 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
Both houses passed the bill in the same form, completing parliamentary passage.
Finally passed both Houses
The Governor-General gave Royal AssentThe final approval that turns the bill into an Act of Parliament., turning the bill into an Act.
Key criticism
The main criticism was that an industry-funded last-resort scheme could grow into a costly cross-subsidyA situation where firms that did not cause the problem end up helping pay for it through the levy., with levies rising sharply and being passed on to firms and ultimately consumers who were not responsible for the original misconduct. That concern was raised cautiously by Coalition speakers during debate and later reinforced by reporting on funding blowouts, but no party represented in the debate opposed the bill itself.
Criticism focused more on scheme cost and sustainability than on rejecting compensation for unpaid AFCAThe complaints body that makes binding decisions about many finance disputes, which this scheme picks up if the firm still does not pay. determinations.
Levy costs could spread unfairly across the sector
Critics warned that a broad levy could make firms pay for failures they did not cause, creating a cross-subsidyA situation where firms that did not cause the problem end up helping pay for it through the levy. across the financial system and increasing pressure to pass costs on to customers.
Long-term sustainability risk
Later reporting suggested the scheme's costs were rising far beyond early expectations, raising doubts about whether the levy design would remain financially sustainable without expanding who pays or cutting entitlements.
Further sources
Votes
The bill passed both chambers on the voices, so there is no list of individual Aye and No votes for final passage.
House agreed to the bill's third reading on the voices, so there is no list of individual Aye and No votes for final passage in that chamber.
Passed on the voices
In a voice vote, members call out Aye or No and the presiding officer judges which side has it. Individual names are only recorded if a formal division is called.
Senate agreed to the bill's third reading on the voices, so there is no list of individual Aye and No votes for final passage in that chamber.
Passed on the voices
In a voice vote, members call out Aye or No and the presiding officer judges which side has it. Individual names are only recorded if a formal division is called.
Amendments grouped by chamber. These cards include amendment outcomes recorded without a counted division.
Senate
The Senate JournalThe official record of Senate proceedings, including whether an amendment was agreed to or defeated. records this outcome as defeated on voices.
Defeated on voices
The chamber decided this amendment without a counted division, so there is no list of individual Aye and No votes.
Parliamentary debate
Start here — lead voices
Stephen Jones supports the bill, saying it creates the levy framework to fund the Financial Services Compensation Scheme of Last ResortThe backstop scheme that pays some consumers when a financial firm has lost and still does not pay what it owes. and make it financially sustainable.
Read in Hansard ↗Stuart Robert says the opposition will not block the bill and will let it pass, but uses the speech to attack Labor for mismanaging the legislation and delaying broader financial advice reforms.
Read in Hansard ↗Ayres supports the bill as the levy framework needed to fund the compensation scheme of last resort, saying it will cover the backlog of eligible AFCAThe complaints body that makes binding decisions about many finance disputes, which this scheme picks up if the firm still does not pay. complaints and then shift the scheme to ongoing industry funding.
Read in Hansard ↗Andrew Wallace says the coalition supports the bill and will not delay it, but he remains concerned about the compensation scheme of last resort and the way levies will be passed on to consumers and institutions.
Read in Hansard ↗All speeches by bloc
3 speakers · 4 contributions · 3 support
“This Bill is the first of two Bills which form the levy framework to fund the financial services compensation scheme of last resort (CSLR).”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.
Second reading speech
Stephen Jones supports the bill because it establishes the compensation scheme of last resort and makes industry fund unpaid compensation for eligible consumers. He says the government has got the balance right, while rejecting calls to include managed investment schemes in the scheme at this stage.
“The Compensation Scheme of Last Resort will provide compensation of up to $150,000 to consumers. Importantly, those consumers must have received a favourable Australian Financial Complaints Authority determination that remains unpaid.”Read this contribution in Hansard ↗
Minister's second reading speech
Stephen Jones supports the bill, saying it creates the levy framework to fund the Financial Services Compensation Scheme of Last ResortThe backstop scheme that pays some consumers when a financial firm has lost and still does not pay what it owes. and make it financially sustainable. He explains that the scheme will cover eligible complaints, with the CommonwealthThe federal government, which funds the scheme at the start before the industry levy takes over. funding setup and industry levies then carrying the ongoing cost.
“This bill is the first of two bills which form the levy framework to fund the Financial Services Compensation Scheme of Last Resort, hereafter 'the CSLR'.”Read this contribution in Hansard ↗
“In the event that the Australian Financial Complaints Authority, AFCA, determines that a consumer is entitled to compensation, they should be compensated by the relevant financial institution, and in many cases they will be. But the CSLR will ensure that, if they cannot, then Australians can still receive compensation of up to $150,000 for unpaid AFCA determinations in their favour.”Read the full speech in Hansard ↗
5 speakers · 6 contributions · 5 support
“We will not deny this bill a second reading. We call on the House, clearly, to recognise the mismanagement of this bill, the government's dishonesty with the Australian people and the need for the government to commit to reducing pressure on inflation not only by controlling its own spending and by not taxing Australians more but by getting on with legislating the Levy review so Australians can have cheaper access to financial services. I support the amendment moved by the member for Hume and commend the bill to the House.”Read the full speech in Hansard ↗
“So whilst I support the legislation, as does the coalition, I just want to put it on the record that I have had concerns and I still have concerns about the concept of a compensation scheme of last resort.”Read the full speech in Hansard ↗
Hansard records 2 separate contributions by Angus Taylor on this bill. They are grouped here so the speaker is listed once.
Second reading speech
Taylor says the coalition will back the compensation scheme bill, but warns that a broad scheme can expose the financial system to significant costs and that the balance needs to be right.
“We do note that a broad based scheme risks exposing the financial system to significant costs, and we've certainly seen that in the UK. But, like the Financial Accountability Regime Bill, the bills are largely identical to the legislation we introduced when we were in government.”Read this contribution in Hansard ↗
Second reading speech
Taylor says the coalition will not block the bill and will allow it to pass, but argues the government mishandled the process and failed to respond properly on related financial advice issues. He backs the bill in principle as part of the royal commission reforms, while using it to criticise Labor's broader economic and tax record.
“Whilst we won't deny this bill a second reading—it has taken way too long for the bill to get to this point anyway—we do call on the House to recognise the government's mismanagement of the bill, the government's dishonesty with the Australian people, particularly with respect to tax, and the need for the government to commit to reducing inflation and pressure on the cost of living by controlling its own spending, not by taxing Australians more.”Read this contribution in Hansard ↗
“It's capped at $150,000. I think that's important. That $150,000 for vulnerable people getting these determinations would be an extremely significant amount of money. If they had a determination towards or over that amount, they clearly lost a very significant amount of money. Where there's been a determination to say that there's been financial misconduct and they should be compensated by an amount of money up to, or maybe exceeding, $150,000, they can get up to $150,000 under the scheme. I'm sure for a lot of people this will be a life-changing outcome after an awful situation that they will have been through. If they've gotten to the point of having that determination from AFCA, this compensation to them of up to $150,000 will hopefully mean in most cases that they've had a very just outcome and they'll get the money back that they deserve to get back. I think that's a good outcome that I'm pleased to support progressing through the House.”Read the full speech in Hansard ↗
“I should say, the majority of financial firms within our country comply with their legal obligations and compensate their clients or their customers when required. One of the other advantages of the compensation scheme is that it will be industry funded. Therefore, when victims of financial misconduct are unpaid due to a financial institution's insolvency, it is up to the rest of the financial services industry to meet the shortfall by way of an annual levy to fund the CSLR. For the first year of its implementation, the government will provide the funding. Then, from the second year onwards, it will be industry funded. To conclude, these bills, if passed, will implement recommendations of the banking royal commission into both the financial accountability regime and also the compensation scheme of last resort. Both of these recommendations were supported by the former Morrison government and by the Albanese government.”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 · Referred to Federation Chamber
Referred to Federation Chamber
The bill reached this recorded parliamentary step.
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 · Reported from Federation Chamber
Reported from Federation Chamber
The bill reached this recorded parliamentary step.
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 · 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.
Senate · Third reading agreed to
Third reading agreed
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Parliament · Finally passed both Houses
Passed both houses
Both houses passed the bill in the same form, completing parliamentary passage.
Assent · Assent
Assent
The Governor-General gave Royal AssentThe final approval that turns the bill into an Act of Parliament., turning the bill into an Act.
