EXPLANATORY STATEMENT
Issued by authority of the Assistant Treasurer and Minister for Financial Services
Corporations Act 2001
Corporations (Financial Services Compensation Scheme of Last Resort – Special Levy) Determination 2025
Subsection 1069H(2) of the Corporations Act 2001 (Corporations Act) provides that the Minister may determine for the levy period and the primary sub-sector a special levy.
The Compensation Scheme of Last Resort (CSLR) provides compensation to eligible consumers where an unpaid determination made by the Australian Financial Complaints Authority (AFCA) relates to a financial product or service within the scope of the scheme. The CSLR is industry-funded and supports confidence in the financial system’s external dispute-resolution framework.
The CSLR, established under Part 7.10B of the Corporations Act, is industry-funded. The funding model is established by the Financial Services Compensation Scheme of Last Resort Levy Act 2023 and the Financial Services Compensation Scheme of Last Resort (Collection) Act 2023 (CSLR Levy (Collection) Act), and the Financial Services Compensation Scheme of Last Resort Levy Regulations.
The purpose of the Corporations (Financial Services Compensation Scheme of Last Resort – Special Levy) Determination 2025 (Determination) is to impose a special levy for the 2025–26 levy period to address the excess of claims, fees and costs in the financial advice sub-sector identified in the CSLR operator’s Financial Services Compensation Scheme of Last Resort Levy (Collection) (Revised Cost Estimates for 2025-26 Levy Period) Determination 2025.
For each levy period, the CSLR operator prepares cost estimates for each sub-sector. A levy collected from a sub-sector cannot exceed the $20 million sub-sector levy cap, and total levy collections cannot exceed the $250 million scheme cap.
On 1 July 2025, the CSLR operator made its revised estimate for the 2025–26 levy period under section 10 of the Collection Act. The revised estimate attributed $67,288,986 to the financial advice sub-sector, exceeding the sub-sector cap. On 4 July 2025, the operator notified the Minister of this excess under subsection 1069F(3) of the Corporations Act, enlivening the Minister’s powers under section 1069H.
The Determination states that the Minister is satisfied that imposing a special levy across specified retail-facing sub-sectors is the most effective way to enable the CSLR operator to pay compensation claims in a timely manner, having regard to the matters in subsection 1069H(6) of the Corporations Act.
The Determination imposes a special levy on those retail-facing sub-sectors for the 2025‑26 levy period, with the total special levy amount for each sub-sector specified in the instrument.
As per the ASIC Supervisory Cost Recovery Levy Act 2017, the Australian Securities and Investment Commission (ASIC) is responsible for collecting the levy. Collection of the levy is carried out in accordance with the CSLR Levy (Collection) Act. The sub-sectors to which the special levy applies are those within the deposit taking and credit, investment management and superannuation, market intermediaries, financial advice, and insurance sectors. Sub-sectors take their meaning from the ASIC Supervisory Cost Recovery Levy Regulations 2017.
This is the first special levy to be imposed under the CSLR legislative framework.
The Corporations Act does not specify any conditions that need to be satisfied before the power to make the Determination may be exercised.
Public consultation occurred through the August 2025 consultation paper Compensation Scheme of Last Resort: exceeding sub-sector levy caps. Stakeholders across financial services were invited to comment. Given the targeted and technical nature of the Determination and its reliance on a statutory mechanism triggered by the CSLR operator’s revised estimate, further consultation was not considered necessary.
The Determination a legislative instrument for the purposes of the Legislation Act 2003.
The Determination is subject to disallowance by the Parliament.
The Determination commenced on the day after registration on the Federal Register of Legislation.
Details of the Determination are set out in Attachment A
A statement of Compatibility with Human Rights is at Attachment B.
ATTACHMENT A
Details of the Financial Services Compensation Scheme of Last Resort Levy (Special Levy) Determination 2025
Part 1 – Preliminary
Section 1 – Name
The title of the instrument is the Financial Services Compensation Scheme of Last Resort Levy (Special Levy) Determination 2025
Section 2 – Commencement
The instrument commenced on the day after the instrument was registered on the Federal Register of Legislation.
Section 3 – Authority
The instrument is made under section 1069H of the Corporations Act 2001 (Corporations Act).
Section 4 – Definitions
The instrument contains definitions for key terms. A note informs that the expressions have the same meaning in the instrument as in the Corporations Act as in force from time-to-time and directs attention to paragraph 13(1)(b) of the Legislation Act 2003.
All definitions except for ‘the Act’, which means the Corporations Act, 2025-26 levy period, which means the 12-month period starting from 1 July 2025, and ASIC Levy Regulations, which means the ASIC Supervisory Cost Recovery Levy Regulations 2017 are definitions for the sub-sectors that are subject to the levy. The meanings for all sub-sectors comes from the relevant definition in the ASIC Levy Regulations.
Part 2 – Special levy for 2025-26 levy period for several sub-sectors
Section 5 – Special levy imposition
The instrument provides that the special levy is made under subsection 1069H(2) of the Corporations Act for the purposes of paragraph 1069H(5)(a) of the Corporations Act and paragraph 9(b) of the Financial Services Compensation Scheme of Last Resort Levy Act 2023 (CSLR Levy Act). Further, the special levy is required to be imposed by section 9 of the CSLR Levy Act for the 2025-26 levy period in accordance with the instrument.
Section 6 – Special levy – several sub-sectors
The instrument provides that for the purposes of paragraph 1069H(5)(b) of the Corporations Act, the amount specified in an item of the table, set out in section 6 of the instrument, is the amount of special levy that needs to be imposed for the 2025-26 level period across all members of the sub-sector specified in the table.
A note directs that for payment of the special levy, see Part 3 of the Financial Services Compensation Scheme of Last Resort (Collection) Act 2023.
Section 7 – Total amount of special levy
The instrument provides that the total amount of special levy, when combining the levies imposed on all specified sub-sectors in the table in section 6 of the instrument, is $47,289,000.03.
A note informs that the sums specified do not exceed the difference between the revised claims, fees and costs estimate for the levy period and the licensed personal advice sub-sector, and the total amount of levy already paid as worked out under subsection 1069H(6) of the Corporations Act.
ATTACHMENT B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Financial Services Compensation Scheme of Last Resort Levy (Special Levy) Determination 2025
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
This Legislative Instrument imposes a special levy for the 2025–26 levy period to address the excess of claims, fees and costs in the financial advice sub-sector identified in the CSLR operator’s Financial Services Compensation Scheme of Last Resort Levy (Collection) (Revised Cost Estimates for 2025-26 Levy Period) Determination 2025.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms. It imposes levies on industry entities, not individuals, and does not regulate personal rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.