The banking sector has stepped into one of the most contentious policy debates of 2026: the future of Australia's Compensation Scheme of Last Resort (CSLR). After a blowout in claims and widening eligibility loopholes, the Australian Banking Association (ABA), led by CEO and former finance minister Simon Birmingham, has publicly urged the Albanese government to redesign a system it believes is drifting far beyond its original purpose.
The message is blunt: without reform, compliant financial institutions, particularly banks, risk becoming the de facto underwriters of risky investments that were never intended to be covered.
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