First CSLR Dixon compensation to be paid by EOFY
The Compensation Scheme of Last Resort (CSLR) has officially launched with 11 claims expected to be paid by 30 June 2024.
The scheme’s first levy period of $4.8 million is expected to fund CSLR claims and costs from 2 April-30 June 2024 with estimates that CSLR will pay 11 claims during this initial period, one of which relates to Dixon Advisory.
Following this, the bulk of the claims will paid by the second levy period of $24.1 million which covers 1 July 2024 to 30 June 2025. Modelling suggests 129 claims will be paid in this period, 86 of which relate to Dixon Advisory.
The CSLR noted the majority of Dixon Advisory claims will be funded by a levy of $241 million from the top 10 banking and insurers.
“It is also important to note that CSLR will be concurrently receiving and paying claims from the pre-CSLR complaint levy during these periods. This levy estimate of $241 million is paid by the top 10 banking and general/life insurers, and is expected to fund the majority of Dixon Advisory (1,556 claims).”
Overall, there have been almost 2,000 complaints received relating to Dixon Advisory which the Australian Financial Complaints Authority (AFCA) said is the largest volume of complaints it has received about a single operator in its five years of operation.
AFCA has assessed that approximately 2,000 overall cases of financial misconduct are currently under investigation, or have been determined, where compensation may be awarded to the consumer that the financial firm is unable to pay.
These include claims regarding personal financial advice, credit intermediation, securities dealing or credit provision.
Eligibility for the CSLR is determined through a three-step process:
- Lodging a complaint with AFCA about misconduct by a financial firm.
- Completion of the AFCA complaint process with the awarding of compensation.
- The failure of the financial firm to pay the awarded compensation, which must be reported to AFCA.
CSLR chief executive, David Berry, said: “Our task is to ensure that those who have experienced financial loss through no fault of their own receive recompense, in line with the legislation that underpins our work.
“By having contributions from industry, the scheme will not only be able to compensate eligible claimants but will also encourage industry to support strong standards, enhancing trust and confidence in the financial services sector. We are focused on delivering a scheme that operates efficiently, economically and effectively.”
AUTHOR
Laura Dew
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