It also announces new CEO and non-executive director
The Compensation Scheme of Last Resort (CSLR) has announced a significant milestone and two key appointments.
The CSLR, designed to commence operations in April, aims to provide compensation to complainants with AFCA determinations in their favour when the responsible financial firm is insolvent or unable to pay.
Pre-CLSR complaint estimate
The CSLR Board has allocated a $241 million initial levy estimate to support eligible consumers impacted by financial misconduct, covering compensation claims and associated costs tied to complaints filed with AFCA from November 1, 2018, to September 7, 2022.
The estimate aligns with the legislated annual cap of $250 million and marks a crucial step in implementing the CSLR framework passed by the Australian Parliament in June 2023.
“We are pleased to announce this important milestone as an important step towards the CSLR being able to pay the compensation claims it will start receiving from April 2024,” the board said in a statement.
“This has been a significant undertaking, as this levy is the first of its kind. It was important that we had a robust and rigorous process to be able to make a best estimate based on the best information available.”
The estimate, subject to potential objection by Federal Parliament through a disallowance process, covers compensation claims up to $150,000 for eligible consumers victimised by financial misconduct relating to personal financial advice, credit intermediation, securities dealing, or credit provision.
After a period of 15 parliamentary sitting days, corporate regulator ASIC will ascertain and collect the levy on behalf of the federal government for relevant financial firms. The legislation mandates the payment of this inaugural levy by the 10 largest banking and insurance groups, determined by their income reported to the Australian Taxation Office for the fiscal year 2021-22.
The CSLR board engaged actuarial consultancies Finity Consulting and Taylor Fry to ensure a robust estimation process.
New CEO and non-executive director
In anticipation of CSLR’s scheduled start in April, the scheme’s transitional board has made two key appointments.
David Berry (pictured above left), an experienced executive and consultant, has been named the inaugural CEO, while Delia Rickard (pictured above right), a respected executive with extensive public service experience, assumes the role of non-executive director.
Berry “will bring a unique set of skills and experience to this role which balance both industry and consumer perspectives,” CSLR’s transitional board said.
“He has driven large-scale organisational, technological and process transformations in the financial services industry. He is also an advocate of positive change for the community, in particular protection of those most vulnerable to financial harm or disadvantage.”
Rickard, with extensive experience at ACCC and ASIC, has a strong background in legal and regulatory compliance, risk management, and consumer protection. She currently serves as a member of the AFCA board and its audit and risk committee. She replaced Andrew Fairley on the CSLR transitional board when the former’s term on the AFCA board ceased.
The transitional board said Berry and Rickard “will ensure the delivery of a valued compensation service which raises confidence in the external dispute resolution framework and, more broadly, the financial services industry.”
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