House debates

Thursday, 8 September 2022


Financial Services Compensation Scheme of Last Resort Levy Bill 2022; Second Reading

9:41 am

Photo of Stephen JonesStephen Jones (Whitlam, Australian Labor Party, Assistant Treasurer) Share this | Hansard source

I move:

That this bill be now read a second time.

This bill is one of two bills which form the levy framework for the financial services Compensation Scheme of Last Resort, hereafter 'the CSLR'.

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.

The first year of operation (2023-24) will be partly funded by a one-off levy issued in the 2023-24 financial year. It will be imposed on the 10 largest financial sector entities (excluding private health insurers and superannuation trustees). This will fund the payment of compensation and associated costs relating to complaints lodged with AFCA, up to the date the bills were introduced into the House of Representatives.

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.

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.

Full details of all of the measures are contained in the explanatory memorandum.

Debate adjourned.


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