Legislation extending an accountability regime to insurance and establishing a Compensation Scheme of Last Resort (CSLR) has been introduced into Federal Parliament.

The Financial Accountability Regime (FAR) strengthens obligations that have applied to banking and extends them to other sectors as part of measures designed to prevent misconduct and elevate standards.

For insurance and superannuation, the regime will apply from the later of July 1 2023 or 18 months after commencement of the legislation, while for banks it will take effect from the later of July 1 next year or six months after the laws start.

The CSLR facilitates payments of up to $150,000 where compensation ordered by the Australian Financial Complaints Authority remains unpaid in relation to disputes involving personal advice, credit intermediation, securities dealing and credit.

Treasurer Josh Frydenberg and Minister for Superannuation, Financial Services and the Digital Economy Jane Hume say consultations on the CSLR will continue during parliamentary committee processes.

“To ensure that the CSLR truly operates as a scheme of last resort the Government will also consult on proposals to enhance the effectiveness of professional indemnity insurance in responding to compensation claims,” Mr Frydenberg and Ms Hume said.

The Government will contribute to costs in the first year, allowing the scheme to start making payments from July, but later it will be fully industry funded through a levy.

The package of measures represents the final tranche of legislation to implement recommendations made by the Hayne royal commission.