The Senate passed Treasury Laws Amendment (Financial Services Compensation Scheme of Last Resort) Bill 2023 plus associated levy bills on last week, finally putting in place a consumer protection mechanism that was recommended by the Ramsay Review in 2017 and endorsed by the Hayne royal commission. The CSLR will provide compensation to consumers where they have an Australian Financial Complaints Authority determination in their favour and where the relevant financial institution has not paid the consumer in accordance with the determination. Court and tribunal rulings will be outside its scope. Compensation will be capped at A$150,000, even though AFCA can order compensation up to $540,000.  Any excess above $150,000 remains a debt owed by the relevant entity, which the consumer can pursue via other means. AFCA determinations must relate to products or services under the following headings: credit activity, financial product advice and dealing in securities. Managed investment schemes are not covered. The relevant minister will authorise a CSLR operator. The government has already asked the AFCA to set up the new body that will operate the scheme. AFCA has said the CSLR operator will be an AFCA subsidiary operating as a separate and independent entity, with its own board and separate industry funding arrangements.  The scheme operator will not be allowed to consider the merits of disputes ruled on by AFCA. Consumers have 12 months after an AFCA determination to notify the ombudsman that compensation has not been paid. The CSLR operator must notify ASIC when it pays compensation and ASIC must then cancel the Australian financial services licence or credit licence of the business involved. Compensation under the CSLR is intended to be available for eligible complaints made to AFCA since it commenced operations in November 2018.  Australia’s 10 largest banking and insurance groups will pay a one-off levy to fund accumulated unpaid claims between November 2018 and September 2022. The design of the CSLR falls short of what many consumer advocates and Labor in opposition would have liked. Critics have argued that the scheme’s compensation cap is too low, court and tribunal rulings should be covered, managed investment schemes should be included and more historical non-payment of compensation should be covered. In the end consumer groups and community legal centres stopped debating the issue, preferring to see consumers get access to a compensation mechanism, even with all its flaws.