The Compensation Scheme of Last Resort (CSLR) will not use the full amount of the levy collected from advisers for this financial year and plans to allocate unused funds towards future claims.
The CSLR stated the pace at which claims reached the scheme were the key driver in its lower-than-expected financial output.
“As we approach the end of the financial year and gain greater clarity on the volume and status of lodged claims likely to be paid in the 2025 financial year, the full $24.1 million levied for the that period will not be fully utilised,” the scheme stated.
“The claim volume originally estimated in December 2023 is expected to eventuate, however, claims have taken longer than anticipated to reach the CSLR and will be received in the 2026 financial year.”
Exact details about how much of the levied amount was used will be released at the end of the financial year and in comments provided to selfmanagedsuper, the scheme stated: “The amount is looking as though it will be sufficient to warrant us formally notifying stakeholders.”
CSLR chief executive David Barry said: “The projected underspend will be utilised to pay compensation in subsequent financial years and be offset against the 2027 financial year levy estimate.”
Barry added claims related to the failure of multiple large-scale firms in the financial advice sector, beyond those related to Dixon Advisory and Superannuation Services, were likely to lead to more than 800 claims.
“These failures continue to significantly impact the amount of compensation likely to be paid in the coming financial years. The key driver to the timing of payments remains the speed at which the CSLR receives claims,” he said.
In line with a lower number of claims paid, the scheme added its operating costs were also tracking below the levy estimate.
Earlier this year, the CSLR released its initial levy estimate of $70 million for the financial advice sector for 2025/26, but today told selfmanagedsuper it was “currently working on the revised levy estimate for this period and expects to confirm the final figure and share it with the government early in the new financial year”.
