The Finance Brokers Association of Australia (FBAA) advises finance and mortgage brokers to familiarise themselves with the details of the government’s newly implemented Compensation Scheme of Last Resort (CSLR), which launched in early April.
FBAA managing director Peter White (pictured above) noted that despite the low-key rollout, brokers, lenders, and other financial sector participants are now subject to a new annual levy to fund the scheme.
“CSLR is funded by industry, and it means that there is now an avenue for a consumer to make a claim of up to $150,000 if it is determined that someone in the financial services sector, including a finance broker, has engaged in misconduct,” White said.
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CSLR is financed by a new annual levy imposed on brokers, lenders, and other financial entities. This development introduces a significant shift in how financial misconduct claims are managed within the industry.
“Just as the scheme is named, this is only claimable as a last resort, which means when PI (professional indemnity) insurance won’t pay,” White said.
The establishment of the CSLR follows recommendations from the Ramsay Review and endorsements from the Financial Services Royal Commission.
The review underlined the scheme’s potential to “promote trust and confidence in the EDR (External Dispute Resolution) framework and the financial services sectors more broadly,” leading to its formation as an independent, not-for-profit company.
For more detailed information, brokers are encouraged to visit CSLR’s newly launched website. This platform is designed to help financial professionals understand the scope, application process, and operational aspects of the CSLR, ensuring they are well-prepared to navigate this new landscape.
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