The Australian Senate has passed legislation to establish the Compensation Scheme of Last Resort (CSLR), ensuring victims of financial misconduct will finally have access to redress and compensation. This implements one of the last outstanding recommendations from the Hayne Royal Commission.

The CSLR will facilitate compensation of up to $150,000 to consumers who have an unpaid determination from the Australian Financial Complaints Authority (AFCA) relating to personal financial advice, credit intermediation, securities dealing and/or credit provision.

To ensure the CSLR can commence as soon as possible, the Government will fund the costs to establish the body that will operate the CSLR, including funding the costs of the first levy period through to the end of the 2023-24 financial year. The scheme will then be funded by industry for future years.

Consumers will be able to lodge claims for compensation from April 2024, with the first compensation payments to follow shortly thereafter.

In its comment on the matter, AFCA noted that it will now begin reviewing the status of complaints that it had placed on pause because they involved insolvent firms.