Financial Services Compensation Scheme of Last Resort Levy (Collection) (Cost Estimates for 2025-26 Levy Period) Determination 2025

Administered by Department of the Treasury

Legislation au F2025L00052 In force Legislative Instrument

Legislation content

EXPLANATORY STATEMENT

Issued by authority of the Compensation Scheme of Last Resort Limited

Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023

Financial Services Compensation Scheme of Last Resort Levy (Collection) (Initial Cost

Estimates for 2025-26 Levy Period) Determination 2025

Section 9 of the Financial Services Compensation Scheme of Last Resort Levy (Collection)

Act 2023 (the Act) provides that the Compensation Scheme of Last Resort (CSLR)

operator, the Compensation Scheme of Last Resort Limited (CSLRL), may determine an

estimate of the sum of the total amount of compensation that will be payable during the

levy period, the Australian Financial Complaints Authority’s (AFCA) unpaid fees expected

for each of the months in the levy period, the CSLR’s expected administrative costs for the

levy period, the Australian Securities and Investment Commission’s (ASIC) expected

administrative costs notified to CSLR for the levy period, the relevant amount of the

capital contribution in accordance with the Act, and any specified shortfall or excess amounts from earlier levy periods in accordance with the Act.

 

The purpose of the Financial Services Compensation Scheme of Last Resort Levy

(Collection) (Initial Cost Estimates for the 2025-26 Levy Period) Determination 2025 is to

determine that estimate for the 2025-26 levy period. This will allow ASIC to impose a levy

of the specified amount under section 8 of the Financial Services Compensation Scheme of

Last Resort Levy Act 2023 in accordance with the calculations detailed in regulation 9 of

the Financial Services Compensation Scheme of Last Resort Levy Regulations 2023.

 

Regardless of the amounts reflected in the Financial Services Compensation Scheme of Last Resort Levy (Collection) (Initial Cost Estimates for the 2025-26 Levy Period) Determination 2025, per paragraph 17(2)(a) of the Financial Services Compensation Scheme of Last Resort Levy Act 2023, ASIC will only be able to impose a levy up to $20 million for a relevant sub-sector. Any amount exceeding this cap may only be imposed by way of a determination under section 1069H of the Corporations Act 2001.

 

The Act requires that the CSLR operator reasonably believes the estimate to be accurate

having had regard to actuarial principles. To this end, CSLRL engaged actuarial expertise

to inform the estimate for the 2025-26 levy period. CSLRL did not engage in public

consultation on this instrument as it reasonably believes the inputs to the specified amount

to be accurate.

 

The Act does not specify any conditions that needs to be satisfied before the power to

make the Determination may be exercised.

 

The Determination is a legislative instrument for the purposes of the Legislation Act 2003.

 

This instrument is subject to disallowance under section 42 of the Legislation Act 2003. The Instrument will be repealed (sunset) in accordance with section 50 of the Legislation Act 2003.

 

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 (Collection) (Cost Estimates for 2025-26 Levy Period) Determination 2025

Section 1 – Name

This section provides that the name of the instrument is the Financial Services

Compensation Scheme of Last Resort Levy (Collection) (Initial Cost Estimates for the 2025-26 Levy Period) Determination 2025.

Section 2 – Commencement

The Determination commences on the day after the instrument is registered on the Federal Register of Legislation.

Section 3 – Authority

The Determination is made under the Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023 (the Act).

Section 4 – Definitions

In this Determination:

 

2025-26 levy period means the 12-month period starting after the end of the second levy

period.

 

credit intermediaries sub-sector has the same meaning as in the Financial Services

Compensation Scheme of Last Resort Levy Regulations 2023.

 

credit providers sub-sector has the same meaning as in the Financial Services

Compensation Scheme of Last Resort Levy Regulations 2023.

 

financial services compensation scheme of last resort has the same meaning as in the

Corporations Act 2001.

 

licensed personal advice sub-sector has the same meaning as in the Financial Services

Compensation Scheme of Last Resort Levy Regulations 2023.

 

securities dealers sub-sector has the same meaning as in the Financial Services

Compensation Scheme of Last Resort Levy Regulations 2023.

 

the Act are references to the Financial Services Compensation Scheme of Last Resort Levy

(Collection) Act 2023.

 

Sections 5 to 8 – Initial estimates of unpaid claims, fees and costs for 2025-26 levy period

The initial estimate for the 2025-26 levy period is determined to be the sum of what CSLRL reasonably believes (having regard to actuarial principles) of:

 

- the total amount of compensation that will be payable under section 1063 of the

Corporations Act 2001 during the levy period and for the sub-sector, other than any

such compensation relating to pre-CSLR complaints; and

- AFCA’s unpaid fees expected for each of the months in the levy period, and

- the CSLR’s expected administrative costs for the levy period, and

- ASIC’s expected administrative costs notified to CSLR for the levy period, and

- the relevant amount of the capital reserve establishment contribution in accordance

with the Act; and

- the specified excess worked out for the first levy period and the sub-sector.


The following table includes the estimate by sub-sector:

Act References

Description

Sub Sectors

Credit intermediaries

Credit providers

Licensed personal advice

Securities dealers

Paragraph 9(1)(a)

Compensation claims

$1,029,650.51

$214,812.54

$59,528,821.67

$760,242.04

Paragraph 9(1)(b)(i)

AFCA unpaid fees

$210,145.75

$976,059.21

$8,001,097.57

$222,146.81

Paragraph 9(1)(b)(ii)

CSLR’s administrative costs

$1,063,974.20

$1,093,047.35

$2,840,330.97

$1,063,649.34

Paragraph 9(1)(b)(iii)

ASIC’s administrative costs

$225,000.00

$225,000.00

$625,000.00

$225,000.00

Paragraph 9(1)(b)(iv)

Capital reserve establishment

$416,666.67

$416,666.67

$416,666.67

$416,666.67

Paragraph 9(1)(b)

 

$1,915,786.62

$2,710,773.23

$11,883,095.21

$1,927,462.82

Paragraph 9(2)(b)

Excess amounts from first levy period

($222,122.00)

($127,055.00)

($1,302,250.00)

($344,678.00)

Subsection 9(1)

Total

$2,723,315.13

$2,798,530.77

$70,109,666.88

 

 

 

 

$2,343,026.86

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 (Collection) (Initial Cost Estimates for the 2025-26 Levy Period) 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

Section 9 of the Act provides that the Compensation Scheme of Last Resort (CSLR)

operator, the Compensation Scheme of Last Resort Limited (CSLRL), may determine an estimate of the sum of the total amount of compensation that will be payable during the levy period, the Australian Financial Complaints Authority’s unpaid fees expected for each of the months in the levy period, the CSLR’s expected administrative costs for the levy period, the Australian Securities and Investment Commission’s (ASIC) expected administrative costs notified to CSLR for the levy period, the relevant amount of the capital contribution in accordance with the Act, and any specified shortfall or excess amounts from earlier levy periods in accordance with the Act.

 

The purpose of the Determination is to determine that estimate for the 2025-26 levy period.

This will allow ASIC to impose a levy of the specified amount under section 8 of the

Financial Services Compensation Scheme of Last Resort Levy Act 2023 in accordance with

the calculations detailed in regulation 9 of the Financial Services Compensation Scheme of

Last Resort Levy Regulations 2023.

 

The Act requires that the CSLR operator reasonably believes the estimate to be accurate

having had regard to actuarial principles. To this end, CSLRL engaged actuarial expertise

to inform the estimate for the 2025-26 levy period. CSLRL did not engage in public

consultation on this instrument as it reasonably believes the inputs to the specified amount to be accurate.

 

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

Overview

The Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023 aims to address the gap in financial services compensation mechanisms by establishing a compensation scheme of last resort. This Act was enacted by the Parliament of Australia to provide a safety net for consumers who have not received adequate compensation through existing avenues. The primary objective is to ensure that consumers who have been aggrieved by financial services firms receive appropriate compensation when other avenues have failed. Under the Act, the Compensation Scheme of Last Resort Limited (CSLR) is tasked with determining cost estimates for levy periods to facilitate the imposition of levies by the Australian Securities and Investments Commission (ASIC). This legislative instrument is designed to enable the CSLR to reasonably estimate the total compensation payable, unpaid fees, and administrative costs for a specified levy period, ensuring that levies are imposed accurately and effectively.

Scope and Application

The Financial Services Compensation Scheme of Last Resort Levy (Collection) (Initial Cost Estimates for the 2025-26 Levy Period) Determination 2025 applies to the Compensation Scheme of Last Resort Limited (CSLR), which is responsible for determining estimates for compensation claims and administrative costs related to financial services in Australia. The instrument is made under the Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023, and its purpose is to enable the Australian Securities and Investment Commission (ASIC) to impose a levy for the specified levy period. The Act applies to financial services compensation claims and associated costs, including those related to credit intermediaries, credit providers, licensed personal advice, and securities dealers. The geographic and jurisdictional reach of this instrument is national, as it applies across Australia and is enforced by ASIC, a Commonwealth entity. There are no specified exclusions or exemptions in the Determination, but it does include a cap on the levy amount that ASIC can impose per sub-sector, up to $20 million. Any amount exceeding this cap must be imposed through a determination under section 1069H of the Corporations Act 2001. The Determination is a legislative instrument subject to disallowance and will be repealed in accordance with the Legislation Act 2003.

Key Provisions

Section 9 of the Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023 (the Act) empowers the Compensation Scheme of Last Resort Limited (CSLRL) to estimate the sum of total compensation payable during the levy period, including Australian Financial Complaints Authority’s (AFCA) unpaid fees, CSLR’s administrative costs, Australian Securities and Investment Commission’s (ASIC) expected administrative costs, the relevant amount of the capital contribution, and any shortfall or excess amounts from earlier levy periods. The Financial Services Compensation Scheme of Last Resort Levy (Collection) (Initial Cost Estimates for the 2025-26 Levy Period) Determination 2025 sets out the estimate for the 2025-26 levy period, which allows ASIC to impose a levy of the specified amount under section 8 of the Act. CSLRL reasonably believes the estimate to be accurate, having regard to actuarial principles, and engaged actuarial expertise to inform this estimate. The Act does not require any conditions to be met before the Determination can be made. The Act imposes specific obligations on CSLRL, requiring them to reasonably believe the estimate to be accurate, considering actuarial principles. CSLRL is also mandated to engage actuarial expertise to inform the estimate for the 2025-26 levy period. The Act does not specify any other conditions that need to be satisfied before the power to make the Determination may be exercised. Furthermore, the Act requires CSLRL to reasonably believe that the inputs to the specified amount are accurate, which is why they did not engage in public consultation on this instrument. There are no specific offences, penalties, or civil/criminal consequences outlined in the Act for breaches related to the estimate. However, the Act does state that regardless of the amounts reflected in the Determination, ASIC will only be able to impose a levy up to $20 million for a relevant sub-sector. Any amount exceeding this cap may only be imposed by way of a determination under section 1069H of the Corporations Act 2001. The Determination is a legislative instrument for the purposes of the Legislation Act 2003 and is subject to disallowance under section 42 of the Legislation Act 2003. The instrument will be repealed (sunset) in accordance with section 50 of the Legislation Act 2003. The Determination commenced on the day after Registration on the Federal Register of Legislation.

Legal classification tags

Area of Law
Financial Services Law
Instrument
Regulation
Concepts
Definitions & Interpretation
Commencement Provisions
Offence Provisions

Interactions

Authorises

All Versions

Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.