Pre-CSLR complaints estimate overview 

The pre-CSLR complaints estimate is the first to be provided under the legislative framework passed by the Australian Government in June 2023. The legislation and associated Levy Act 2023, Levy Regulations 2023 and Levy (Collection) Act 2023 set out the annual levy process.

Further estimates and annual levies will be: 

  • Year 1 – April to June 2024 funded by the Australian Government.
  • Year 2 and ongoing – July 2024 to June 2025 funded by relevant sectors of the financial services industry.

The legislation sets out the levy is determined as an estimate that is the sum of: 

(a) the specified amount equal to what the CSLR operator reasonably believes (having regard to actuarial principles) will be the total amount of compensation that:

i. will be payable under section 1063 of the Corporations Act 2001; and

ii. relates to pre-CSLR complaints; and

(b) the specified amount equal to what the CSLR operator reasonably believes (having regard to actuarial principles) will be the portion of the total amount of AFCA’s unpaid fees for all months that relates to pre-CSLR complaints; and

(c) the specified amount equal to AFCA’s accumulated unpaid fees.

The total value of this one-off levy cannot exceed the scheme levy cap of $250 million. 

This estimate, following legislative processes, will form a one-off levy that is expected to pay eligible compensation claims from the pre-CSLR complaint backlog from 1 November 2018 to 7 September 2022. Any complaints lodged from 8 September 2022 onward will be funded by annual levies. 

The legislation requires payment of this pre-CSLR complaints levy by the ten-largest banking and general/life insurance groups by income from financial year 2021-2022, as reported by the Australian Taxation Office (ATO).

Funding will pay for compensation claims of up to $150,000 to eligible consumers that have been the victims of financial misconduct relating to personal financial advice, credit intermediation, securities dealing or credit provision. 

Pre-CSLR Complaints Estimate 

The CSLR board has determined a pre-CSLR complaints estimate of $241 million. This falls within the $250 million cap set in the legislation. 

In accordance with the Act and its statutory obligations the CSLR Board has determined the estimate having due regard to actuarial principles and in cooperation with qualified and recognised experts. 

The Board has not deviated from the estimate determined in the report from independent actuarial consultant, Finity Consulting. The Board reasonably believes, noting the prudent and realistic assumptions made by Finity Consulting, that the estimate accurately reflects the expected cost of meeting the pre-CSLR complaints.

It is further noted that a second independent actuarial consultant, Taylor Fry, has endorsed the methodology, analysis and determination of Finity Consulting. 

How the estimate was calculated 

CSLR Actuarial Policy 

To meet its requirements under the legislation to apply ‘actuarial principles’ in reaching its decision, the CSLR Board established an Actuarial Policy. This was designed with input from suitably qualified actuarial experts. 

This policy provides the Board with a framework and principles to responsibly determine estimates for levies imposed under the legislation. The four guiding principles adopted were: 

  • Commitment to comply with all legislative and regulatory requirements in determining the estimate for the subsequent determination and imposition of the levy upon industry by ASIC to appropriately fund the CSLR Scheme. 
  • Seek professional assistance from suitably qualified experts to determine the estimate including the engagement of the Principal Actuary (Finity Consulting) to assist with its determination of the estimate in line with actuarial principles. 
  • Further seek professional assistance from suitably qualified experts to review the estimate once determined, including the engagement of the Reviewing Actuary (Taylor Fry) to review the determination of the estimate by the Principal Actuary (Finity Consulting) to ensure alignment with actuarial principles. 
  • Undertake to make diligent enquires and appropriate examinations of both the Principal Actuary’s (Finity Consulting) estimate, the Reviewing Actuary’s (Taylor Fry) quality assurance and all other enquiries or consideration of appropriate factors which the Board deems relevant to ensure that it is the Board’s reasonable belief that the estimate accurately reflects the expected cost of operating the scheme within the relevant period. 

Independent estimate modelling and report 

CSLR engaged the services of a leading actuarial consultancy Finity Consulting, as Principal Actuary, to undertake the detailed modelling and analysis, ensure compliance with legislative requirements, and confidence in the estimate. 

Finity Consulting recommendation for the Pre-CSLR Complaints Estimate is $241 million.

This report was further reviewed and endorsed by a second independent actuarial consultancy, Taylor Fry, as Reviewing Actuary. 

A full copy of this report is available to provide transparency of the estimate modelling and assumptions.

Finity is Australia’s largest independent actuarial and analytical consulting form. Their actuarial services are provided by over 150 professionals with deep domain knowledge across the financial services industry, and the private and public sectors. They bring experience working on similar arrangements to CSLR, with the Securities Exchange Guarantee Corporation and the ASX. 

Taylor Fry has extensive experience working with government agencies to establish key actuarial processes and policies, as most recently demonstrated by work with the ARPC. It has proven experience providing actuarial quality assurance to a high-profile compensation scheme. 

What happens next 

The legislation requires certain steps in Parliament must take place before ASIC are able to invoice the levy. 

  • Levy instrument and explanatory memorandum registered on the Federal Register of Legislation managed by the Office of Parliamentary Counsel. 
  • Instrument tabled in each House of Parliament. 
  • A ‘Disallowance period’ of 15 days for each House of Parliament needs to be satisfied.
  • ASIC determines levy portion for each of the 10 financial firms based on the published ATO data. 
  • ASIC issue individual invoices to each firm. The levy for the pre-CSLR complaints estimate is payable in two equal instalments. The first instalment will be due within 30 days of the invoice date.
  • ASIC collects the payment on behalf of Government. 
  • Government then provides the funds to CSLR, so it is able to commence paying compensation claims to eligible consumers.

More information/helpful links 

For more information on:

Invoicing or paymentAustralian Securities and Investment Commission (ASIC) 
 asic.gov.au
Legislation or Government policyMinisterial Correspondence
Office of the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP. 
Australian Financial Complaints Authority (AFCA) or your determinationafca.org.au
call 1800 931 678.