The Institute of Financial Professionals Australia (IFPA) has welcomed the government’s confirmation SMSFs will be excluded from the 2025/26 Compensation Scheme of Last Resort (CSLR) special levy.
IFPA head of technical services Natasha Panagis said requiring SMSFs to contribute would be inequitable given they cannot ordinarily access the Australian Financial Complaints Authority or benefit from the CSLR.
Last week, Minister for Financial Services Daniel Mulino announced the $47.3 million CSLR special levy for 2025/26 would be applied across advice, platforms, superannuation trustees, responsible entities and other retail-facing businesses. The largest percentage, or 22 per cent, will be levied on financial advisers, with credit providers getting the next largest allocation at 15.3 per cent, followed by 13.7 per cent for responsible entities and 12.9 per cent for super trustees.
However, Panagis stressed reports the government could consider extending CSLR shortfall levies to SMSFs from the 2027 financial year were deeply concerning, reiterating the fact trustees from this sector cannot participate in the program.
“Asking SMSFs to fund a scheme they cannot use amounts to double dipping when their adviser is already contributing. SMSFs already bear the full consequences of their own investment decisions and should not be made to subsidise misconduct in unrelated parts of the market. Expecting them to pay for failures elsewhere in the system is inequitable, inappropriate and simply unjustified,” she explained.
Overall, IFPA welcomed the proposal to spread the 2025/26 CSLR special levy across all 23 retail-facing sub-sectors of the financial services industry.
“For too long, compliant advisers have effectively been treated as the chequebook of last resort for failures they did not create. Broadening the CSLR levy base is a sensible step that acknowledges the role of platforms, product issuers and other retail-facing businesses in the ecosystem that failed thousands of ordinary investors,” IFPA president Scott Heathwood indicated.
“If government wants high-quality, conflict-free advice available to everyday Australians, it cannot keep piling costs onto the very professionals who stayed within the rules while others pushed the boundaries. A broad-based levy that aligns cost with responsibility is a more disciplined and sustainable approach than treating advisers as an open-ended funding source.”
The industry body indicated it would participate actively in the proposed discussion paper on longer-term CSLR funding settings, which Mulino said would happen in February.
