The Institute of Financial Professionals Australia (IFPA) has expressed concerns regarding the costs financial advisers will be forced to pay to fund the compensation scheme of last resort (CSLR) levy, in addition to highlighting issues with the retrospective nature of the fee.
“At a time when there is a shrinking adviser pool coupled with the higher Australian Securities and Investments Commission supervisory levy and other rising operating costs, advisers will have no choice but to pass this extra cost onto their clients. This extra cost is yet another hurdle that advisers need to overcome,” IFPA head of superannuation and financial services Natasha Panagis said.
Following an announcement by the CSLR last week, the financial advice sector will be expected to contribute over $18 million to fund the second levy period during the 2025 financial year, equating to a cost of around $1200 per financial adviser.
Panagis noted advisers should not be expected to fund compensation claims for legacy complaints that occurred prior to the establishment of the CSLR, which have been incorporated into the estimates for the second levy period.
“The retrospective nature of the CSLR levy runs counter to the government’s Quality of Advice Review objective, which is to make advice more accessible and affordable for all Australians,” she said.
“We urge the government to remove the retrospective aspect of the CSLR levy by basing the levy on the date the claim is made rather than the date the claim was finalised.
“If the government wants advisers to remain in business and attract new entrants, it should not burden existing advisers with more costs and instead fund all legacy complaints that occurred before the CSLR scheme was set up.”
The SMSF Association and Financial Advice Association Australia have both voiced concerns about the fairness of the levy and that the levy estimates appear to contradict the government’s aim to make financial advice more affordable for more Australians.