The SMSF Association (SMSFA) and Financial Advice Association Australia (FAAA) are frustrated with the minor reduction in the Compensation Scheme of Last Resort’s (CSLR) levy estimate for the 2026 financial year, noting it is still unsustainable for the sector.
The scheme stated the need for a revised figure came about as the initial levy estimate exceeded the $20 million cap for the personal financial advice sub-sector and following a review by its principal actuary, the revised number for the 2026 financial year has fallen slightly from $70.1 million to $67.3 million.
“We are bitterly disappointed with the quantum of the levy amount that punishes the vast majority of advisers who act in the best interests of their clients,” SMSFA chief executive Peter Burgess said.
“The CSLR chief executive, David Berry, explicitly acknowledged this when announcing the levy, saying ‘the harm caused by those in the finance sector doing the wrong thing disproportionately impacts and detracts from those acting correctly’.”
Burgess also pointed out the revised figure for the financial advice sector, which will require an additional special levy of $47.3 million over the cap, creates an amount that is too high for the sector to sustain.
While acknowledging the importance of having a CSLR, the industry body questioned the current funding model and urged the government to speed up the review of the scheme that it commissioned in January.
“When the review was announced, the government stated that ensuring the scheme is sustainably funded would be an important focus,” Burgess said.
The association questioned what the regulator is doing “upstream” to detect and act on early signs of advice failures.
“By the time the claims reach the CSLR, it’s usually too late to avoid or mitigate the cost of compensation,” Burgess said.
FAAA chief executive Sarah Abood said the small decrease was a result of “a delay in the processing of known complaints, not a reduction in expected claims”.
“Further, and most importantly, these numbers do not include any allowance for the impact of either Shield or First Guardian, although numerous announcements by ASIC suggest these are very substantial matters where financial advice complaints are likely,” Abood said.
“Urgent action is needed to fix the CSLR funding mechanism, otherwise this will decimate the advice profession, further drive up the cost of advice and put professional financial advice completely out of reach for average Australians.”
