The Financial Advice Association Australia (FAAA) has expressed its concerns the special levy for the Compensation Scheme of Last Resort (CSLR) could see more financial planners leave the industry if the current allocation system is continued past the 2026 financial year.
“I’m genuinely concerned that it will accelerate departures in our sector … when you’re a small business, which most adviser firms are, if you’ve got three or four advisers, for some businesses, this could wipe out their profit. It really is meaningful for us, in a way that for some of the larger sectors with large institutions, it’s a rounding error for them,” FAAA chief executive Sarah Abood told attendees of an end-of-year wrap-up webinar for FAAA members.
At a roundtable meeting with industry stakeholders held yesterday, Minister for Financial Services Daniel Mulino announced the $47.3 million CSLR special levy for 2025/26 would be spread across all 23 retail-facing subsectors, with the largest allocation of 22 per cent, or $10.4 million, going to the financial advice sector.
For 2025/26, the FAAA has calculated the action would equate to an extra cost of $700 per adviser, bringing their total annual expense for the levy for this year to over $2000 per adviser.
But Abood said she was especially concerned by what could happen next year if a similar allocation policy is used, given CSLR estimates are continuing to grow.
“That concerns me even more because as big as the numbers are for us right now, next year, at the moment, the estimate is something of the order of $130 million that would go to our sector for the 2027 financial year levy. That doesn’t include Shield and First Guardian and that number is like likely to increase,” she indicated.
Based on that $130 million assumption, the individual levy on each adviser would be $8600 on current numbers and $9300 if 1000 advisers were to leave the profession.
“There’s simply no way that we can sustain continuing to pay these costs. And that’s a concern for everyone because that means that our sector is at risk, but the consumer compensation is at risk as well,” Abood explained.
The Super Members Council (SMC) is also urging the government to rethink its proposed approach to the CSLR levy, suggesting it would force everyday Australians with super to pay $6 million this year.
“We strongly oppose pushing the bill onto low and middle-income Australians who have chosen the safeguards of the highly regulated super system to pay for misconduct in other high-risk financial products,” SMC chief executive Misha Schubert said.
