The SMSF Association is calling for an immediate overhaul of the Compensation Scheme of Last Resort (CSLR) following the 82 per cent annual increase in the initial estimate for the 2027 financial year announced yesterday.
The 2027 financial year estimate was revealed to be $137.5 million, with $126.9 million, or 92.3 per cent, assigned to the financial advice sector.
“The profession cannot continue operating under escalating levies and unresolved funding uncertainty,” SMSF Association chief executive Peter Burgess said.
“We support the principle of a last-resort compensation scheme, but it is unfair and unsustainable to expect the financial advice profession alone to pick up the cost of failed advice and products.”
The sector body also expressed its concern that the initial estimate does not include any impact from potential claims stemming from the Shield Master Trust or First Guardian Master Trust collapses, which are likely to result in a significantly higher revised estimate in mid-2026.
“This level of uncertainty is a significant concern for the advice profession and advisers are being asked to absorb rising and unpredictable costs stemming from failures they played no part in, and there is no indication that the frequency or scale of these failures is easing,” Burgess indicated.
According to the SMSF Association, the financial advice industry deserves greater transparency and a clear pathway towards sustainability, especially given it is still waiting to hear whether a special levy will be needed to fund the previous levy period’s shortfall of more than $50 million.
To this end, it is calling on the government to release the findings of the Treasury-led review of the CSLR commissioned earlier this year.
“The review was established with the objective of assessing the long-term sustainability of the scheme,” Burgess explained.
“Those findings are now critical to informing the next steps and the profession cannot continue operating under escalating levies and unresolved funding uncertainty.”
