What is the CSLR?

The Compensation Scheme of Last Resort (CSLR) is an Australian Government initiative designed to help victims of financial misconduct and build trust in the finance industry. The CSLR will provide compensation of up to $150,000 to eligible consumers who have an unpaid determination from the Australian Financial Complaints Authority (AFCA) relating to: personal financial advice, credit provision, credit intermediation, or securities dealing. The CSLR operator (a non-for-profit company) has been authorised by the Australian Government to run the scheme, which commenced operations on 2 April 2024.

The CSLR is funded by levies imposed on subsectors of the financial services industry by the Financial Services Compensation Scheme of Last Resort Levy Act 2023. The CSLR operator is responsible for determining the total amount of levy payable by each subsector.

Who is subject to CSLR levies?

As per the legislation, the Compensation Scheme of Last Resort (CSLR) will be funded, on an ongoing basis, through annual levies on the following four defined subsectors of the financial services industry:

• licensees that provide personal advice to retail clients on relevant financial products
• credit providers
• credit intermediaries
• securities dealers.

Who are the entities involved in the operation of the CSLR?

The Australian Financial Complaints Authority (AFCA) is an independent external dispute resolution scheme that deals with consumer and small business complaints about financial firms.

If a complaint can't be resolved between the parties, AFCA might issue a final determination awarding compensation to the consumer. If the financial firm is insolvent and fails to pay the compensation, the consumer may be able to make a claim with CSLR for a compensation payment if they meet the eligibility criteria.

AFCA also helps the CSLR operator estimate costs and AFCA fees for the annual levy, and provides data about complaints and unpaid determinations.

The CSLR operator is responsible for determining the total costs to the scheme for the leviable period.

ASIC is responsible for calculating the levy amount payable per entity, issuing levy notices and collecting levy payment on behalf of the Australian Government.

The method for calculating an individual entity’s levy is set out in the Financial Services Compensation Scheme of Last Resort Levy Regulations 2023.

How much will entities pay and when?

ASIC will use the industry funding business activity metrics of the qualifying year to calculate the levy amount for the CSLR levy period. The method for calculating an individual entity’s levy is set out in the Financial Services Compensation Scheme of Last Resort Levy Regulations 2023.

The qualifying period, for a levy period, means the 12 month period starting 24 months before the start of the levy period.

Example:

Levy Period: 1 July 2024 to 30 June 2025

Qualifying Period: 1 July 2022 to 30 June 2023

CLSR Annual levy notices for the 2024-25 leviable year will be issued in early August 2024.

You may wish to refer to the CSLR levy framework on the CSLR website for further information on the CSLR timeline.

Where can I find out more information about CSLR?

Visit the CSLR website for more information about the scheme.

How is my levy calculated?

ASIC will use the industry funding business activity metrics for the qualifying period to calculate the leviable amount for the CSLR levy period. The method for calculating an individual entity’s levy is set out in the Financial Services Compensation Scheme of Last Resort Levy Regulations 2023.

The qualifying period, for a levy period, means the 12 month period starting 24 months before the start of the levy period.

Each subsector has a minimum levy component. This levy amount is $100.00.

Entities may also receive a graduated levy component, based on an entity’s size or level of business activity. A summary of the levies can be found on the Compensation Scheme of Last Resort.

What if my entity falls into more than one subsector?

If an entity falls into more than one of the four defined subsectors of the financial services industry, the levy relevant for each subsector is payable. For example, if an entity is both a credit provider and credit intermediary, both levies will be payable, and the levy notice will reflect this.

The four defined subsectors are:

• licensees that provide personal advice to retail clients on relevant financial products
• credit providers
• credit intermediaries
• securities dealers.

What obligations do regulated entities have?

If your entity is subject to the annual CSLR levy, you must register and maintain contact details on the ASIC Regulatory Portal. You will be required to submit business activity metrics via the portal between July and September/October each year as part of the entity’s industry funding obligations.

ASIC will use the industry funding business activity metrics of the qualifying year to calculate the leviable amount for the relevant CSLR levy period.

Further information on business activity metrics can be found at: FAQs: ASIC Industry funding.

Are levies subject to GST?

No. The levies are not subject to GST.

Why is the individual levy calculated from 30 June 2023 data when I’ve just provided the 30 June 2024 data?

ASIC will use the industry funding business activity metrics of the qualifying year to calculate the levy amount for the CSLR levy period. The method for calculating an individual entity’s levy is set out in the Financial Services Compensation Scheme of Last Resort Levy Regulations 2023.

The qualifying period, for a levy period, means the 12 month period starting 24 months before the start of the levy period.

For the 2024-25 levy period, the qualifying period is the 2022-2023 financial year.

The data submitted for the financial year ended 30 June 2024 will be used to calculate the CSLR levy for the 2025-26 levy period.

What happens in the circumstance where the number of authorised representatives has reduced since 30 June 2023? Am I still required to pay the levy based on 12 month old information?

ASIC will use the industry funding business activity metrics of the qualifying year to calculate the levy amount for the CSLR levy period. The method for calculating an individual entity’s levy is set out in the Financial Services Compensation Scheme of Last Resort Levy Regulations 2023.

The qualifying period, for a levy period, means the 12 month period starting 24 months before the start of the levy period.

For the 2024-25 levy period, the qualifying period is the 2022-2023 financial year.

The graduated levy component for the Credit intermediaries levy is based on the number of credit representatives at the end of the qualifying year. Even if the number of credit representatives has reduced since 30 June 2023, the levy is calculated based on data from the qualifying period and is payable.

The graduated levy component for the Financial advisers on relevant products to retail clients levy is based on the number of financial advisers at the end of the qualifying year. Even if the number of financial advisers has reduced since 30 June 2023, the levy is calculated based on data from the qualifying period and is payable.

When is my levy due for payment?

CSLR levies are due for payment 30 business days after the levy notice is issued.

How do I pay my levy?

BPAY

Use the BPAY details provided on your levy notice to pay using BPAY. You must ensure the BPAY reference number is correct. The BPAY reference number will begin with the digits ‘409’.

Ensure you allow three business days for electronic processing.

Electronic Funds Transfer

Use the Electronic Funds Transfer details provided on your levy notice to transfer directly from your financial institution. You must ensure the Electronic Funds Transfer reference number is correct. The Electronic Funds Transfer reference number will begin with the digits ‘409’.

Credit card

The credit card payment option is available using the ASIC Regulatory Portal. Portal account holders can log in to their portal account to view their CSLR levy notice and make a payment online.

How did ASIC calculate the levy amount shown on my levy notice?

ASIC use the industry funding business activity metrics from the qualifying period to calculate the leviable amount for the CSLR levy period. The method for calculating an individual entity’s levy is set out in the Financial Services Compensation Scheme of Last Resort Levy Regulations 2023.

A summary of levies can be found on Compensation Scheme of Last Resort.

What happens if I don’t pay?

If payment is not received by the due date, late payment penalty of 20% p.a. calculated monthly will apply until your levy is paid, see CSLR penalties.

If your levy is not paid in full after 12 months, ASIC may cancel your licence and deregister your company.

Can I apply for a levy waiver or penalty waiver?

We will only consider waiving a levy or penalty in exceptional circumstances when there were issues beyond the control of all representatives of the entity. See more: How to apply for a CSLR levy or penalty waiver.

What happens if I overpaid?

You can request a refund if you have accidently overpaid. We will provide a refund in the same way you made payment. See more: If you've overpaid.

Can I apply for a payment plan?

In some cases, we can arrange a payment plan that allows you to make industry funding payments in instalments. See more: Details on how to apply for a CSLR payment plan.

Why didn’t I receive my levy notice online?

If you have received a levy notice via mail (rather than online) it means that you may not have registered an ASIC Regulatory Portal account to confirm or submit relevant information to ASIC. You are required to register an ASIC Regulatory Portal account to receive and submit relevant information.

All entities subject to CSLR obligations must pay their levy notice by the due date each year.

I didn’t know I had CSLR obligations, am I still required to pay my levy?

All entities subject to CSLR obligations must pay their levy by the due date provided on the levy notice. Treasury has reached out to a number of industry associations to provide awareness of the pending levies.

The Government's CSLR arrangements became law in 2023.

The industry funding annual return for the qualifying period advised entities in the relevant subsectors that information provided will also be used to calculate your entity’s Compensation Scheme of Last Resort (CSLR) levy.

Why have I received a levy notice when I cancelled or varied my licence during the financial year?

Entities that are authorised to operate in a subsector within the qualifying period are subject to CSLR obligations. As per Financial Services Compensation Scheme of Last Resort Levy Act 2023, the qualifying period, for a levy period, means the 12-month period starting 24-months before the start of the levy period.

If an entity was authorised to operate in a subsector during the relevant qualifying period and did not cancel or vary their licence until after the due date of the annual return, the entity is subject to CSLR obligations for the relevant levy period.

I have received an email notification from ASIC that a CSLR levy is ready for payment, how do I view the levy notice?

ASIC Regulatory Portal account holders can log into their portal account to view their CSLR levy notice and make a payment online. The page has information on what to do if you have forgotten your password.

Follow these steps to access your levy notice:

1. Log in to your Regulatory Portal account.
2. Select the relevant entity from your current connections.
3. Navigate to the Administration menu and select 'Billing'.
4. Click on the 'CSLR levy and reminder notices' tab.

Why have I received an industry funding levy notice and a CSLR levy notice?

Industry funding levies and CSLR levies are administered under different legislation - ASIC Supervisory Cost Recovery Levy Regulations 2017 and Financial Services Compensation Scheme of Last Resort Levy Regulations 2023

Under the Industry Funding Model, ASIC’s regulatory costs are funded through appropriation from the Commonwealth. These costs are recovered from the industry sectors we regulate through a combination of:

• industry funding levies charged to 52 subsectors and
• fees for service for user-initiated, transaction-based activities where we provide a specific service to individual entities.

The Compensation Scheme of Last Resort (CSLR) is an Australian Government initiative designed to help victims of financial misconduct and build trust in the finance industry. The CSLR will provide compensation of up to $150,000 to eligible consumers who have an unpaid determination from the Australian Financial Complaints Authority (AFCA) relating to: personal financial advice, credit provision, credit intermediation, or securities dealing. The CSLR operator (a non-for-profit company) has been authorised by the Australian Government to run the scheme, which commenced operations on 2 April 2024.

Why is my industry funding levy notice period different from the CSLR levy notice period?

ASIC’s Industry Funding Model is an ‘ex-post model’. This means that the regulatory costs for each subsector are calculated at the end of the financial year based on the actual reported regulatory costs we expend for each subsector.

As required by law, the CSLR operator estimates the costs to fund the scheme during the upcoming levy period. The first levy period, from 2 April 2024 to 30 June 2024 is funded by Government. The subsequent levy periods are funded by the four industry subsectors. The second levy period is for the 1 July 2024 to 1 July 2025. For each levy period the levy amount is based on the actuarial estimates of the number of claims expected to be paid during that period.

Visit the CSLR website for more information about the scheme.