Submission: Compensation Scheme of Last Resort

28/05/2026

ARITA has made a submission to Treasury's Options Paper, Compensation Scheme of Last Resort (CSLR): Reform options to support ongoing sustainability.

ARITA's response is confined to Proposal 2, concerning the expansion of the CSLR subrogation rights, and Proposal 8, concerning recovery of unpaid AFCA determinations within corporate groups.

These proposals intersect directly with external administration, proof of debt adjudication, subrogated recovery rights, corporate group structures and the operation of Chapter 5 of the Corporations Act 2001 (Cth) (Corporations Act).

ARITA supports the policy objective of improving recoveries where that can be done fairly, efficiently and consistently within the parameters of insolvency law. Recoveries that reduce the net cost of the CSLR will support the sustainability of the Scheme.

However, reforms must not create parallel recovery regimes that cut across ordinary insolvency principles, undermine the position of other creditors or impose liability on corporate groups without appropriate safeguards.

In this regard, ARITA does not support the introduction of specific legislation or reform that would operate inconsistently with Sections 553 and 556 of the Corporations Act, particularly the established statutory framework for the admission and priority of creditor claims.

ARITA is particularly concerned that reforms directed to address what may be a small number of fact-specific failures could result in further piecemeal amendment of Chapter 5 of the Corporations Act. ARITA has consistently supported comprehensive review of Australia's insolvency framework rather than isolated reforms that respond to one stakeholder's recovery difficulties while creating broader system impacts.

Read ARITA’s submission here.