According to Minister for Financial Services Stephen Jones, with the commencement of the Compensation Scheme of Last Resort (CSLR), the government is delivering on its election commitment to give victims of financial services misconduct access to redress and compensation.
Beginning on 2 April 2024, Mr Jones said, consumers will be able to lodge claims for compensation under the CSLR with payments to follow for eligible consumers.
Along with the start date, Mr Jones announced that the government had appointed former Financial Planning Association chief executive officer Jo‑Anne Bloch as the inaugural independent chair of the CSLR for an initial term of three years.
“Ms Bloch is an experienced leader in financial services, and in particular, financial advice, with extensive experience in engaging government and in the not‑for‑profit sector and is well‑equipped to guide the scheme at its inception and beyond,” Mr Jones said in a statement.
“The government congratulates Ms Bloch on her appointment to the board of CSLR Limited.”
In December, the CSLR transitional board appointed David Berry as its inaugural chief executive and Delia Rickard as a non-executive director.
Mr Berry has more than 25 years of experience in financial services as an executive, non-executive director, and consultant, and was most recently the CEO of Way Forward Debt Solutions, a non-profit that helps people get out of debt.
Ms Rickard has worked in a variety of senior roles, primarily at the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission and is an associate member of the Australian Communications and Media Authority.
She is also a current member of the Australian Financial Complaints Authority (AFCA) board and its audit and risk committee.
The CSLR includes a legislative requirement that a director of AFCA must be appointed to the CSLR board, which saw Ms Rickard replace Andrew Fairley on the CSLR transitional board from 1 January 2024, when Mr Fairley’s term on the AFCA board ceased.
This was followed in January by the appointment of former UniSuper chief executive Kevin O’Sullivan – who served as CEO at the $124 billion fund for eight years – as a non-executive director.
The CSLR will provide compensation of up to $150,000 to eligible consumers who have an unpaid determination from AFCA relating to the provision of personal financial advice, credit intermediation, securities dealing and credit provision.
The 10 largest banking and insurance groups in Australia will foot the bill for this first establishing levy.
“The CSLR is intended to provide compensation where the misconduct is by a financial services firm that was licensed to provide the relevant product or service,” Mr Jones said.
“The government will ensure this intent is met through amendments to the CSLR legislation in due course to provide further certainty to consumers about the scope of the CSLR.
“As an interim step, amendments have been made to AFCA’s authorisation so that, to the extent possible, complaints that may be eligible under the CSLR are progressed only if the financial services firm was licensed to provide the relevant product or service.”
The minister added that changes to AFCA’s rules will also be required to implement the amendment to AFCA’s authorisation.
“By announcing a starting date and appointing the chair of the board of CSLR Limited, the government is demonstrating its ongoing commitment to ensuring victims of financial services misconduct have access to redress and compensation,” he said.
Under an initial estimate released by the CSLR board in January, the initial levy to fund claims from eligible consumers who have been the victims of financial misconduct will total $241 million.
This figure will meet the compensation claims and costs in relation to complaints that were lodged with AFCA between 1 November 2018 and 7 September 2022, and falls within the annual cap of $250 million as set out in the legislation for the CSLR.
The initial levy estimate includes provision for the majority of claims involving Dixon Advisory and Superannuation Services (DASS). DASS went into administration in January 2022, with a large number of complaints subsequently lodged with AFCA.
In order to calculate the estimate, CSLR engaged actuarial consultancy Finity Consulting, with a second actuarial consultant, Taylor Fry, engaged to review the Finity analysis.
Given ASIC were warned multiple times over 10 years about Dodgy Dixon’s MIS fiasco and did nothing.
Given ASIC let Dodgy Dixon’s float on ASX and bosses walk off with $$$$ Million, whilst ASIC knew of the MIS fiasco.
ASIC only arrived after the train wreck and now want the CSLR to bail out Dixon’s clients because ASIC did NOTHING.
Where is ASIC being held accountable for such negligence ?
You can get very few Dixon’s AFCA cases are processed before 30 June 2024. Then the initial CSLR funding will disappear and Real Advisers will be made to pay $20k each to cover this disaster.
This case alone deserves an ASIC RC.
Given ASIC knew about Dodgy Dixon’s MIS unfolding train wreck for 10 years and did nothing.
ASIC even let Dixon’s float on ASX so the big wigs escape with 10s of Millions $$$, again whilst knowing about dodgy MIS fiasco.
Why aren’t the directors, bosses etc of Dodgy Dixon’s made to pay ????
Why aren’t ASIC held accountable ????
We all know Adviser’s are going to get stung hugely for this CSLR payment as bugger all Dixon’s AFCA claims will be dealt with pre 30 June 2024 and then the initial funding will disappear.
Guess be best start watering and fertilising those money trees we keep in the back gardens…