The Financial Advice Association Australia (FAAA) is calling for the Compensation Scheme of Last Resort (CSLR) special levy to be spread evenly across all retail facing sub-sectors regulated by the Australian Financial Complaints Authority (AFCA), instead of being based on each sub-sector’s Australian Securities and Investment Commission (ASIC) supervisory cost burden.
“We’ve specifically suggested splitting it evenly across all the sub-sectors that are regulated by AFCA on the basis that nobody who’s paying this levy was responsible for this behaviour and that we are a small business sector,” FAAA chief executive Sarah Abood told attendees of a member advocacy webinar today.
By using the existing proportional method, financial advisers are bearing the major share of the cost of the levy and under this methodology the financial advice sub-sector ends up with the highest proportion of the special levy at 22 per cent, or $10.4 million, for the 2026 financial year. In comparison, the next highest sub-sector of credit providers will pay $7.2 million.
“We’re the only [sub-sector] that is dominated by smaller micro businesses. Our ability to pay this is really constrained. These bills are getting way too high, so we are representing that position very loudly and very consistently with government,” Abood said.
The association has also sent a survey to members this week to determine the real-world impact of the levy on its constituents.
“What we’re trying to get directly from you is what is the impact of this levy on your business? What are you doing to cover these bills? What are you thinking about your future actions if these bills keep coming in and keep stacking up? That will help us with both Treasury and government because there’s nothing like direct information from the people who are affected,” Abood said.
She added another major priority in terms of CSLR advocacy was ending phoenixing.
“When you look at what is the biggest contributor to the CSLR, obviously it’s Dixon Advisory. The reason the CSLR copped it is the way that entity was effectively phoenixed by its parent, E&P Financial Group. That’s the single biggest contributor to payments so far and we have to stop it,” she said.
“It is well and truly outside the expectations of Australians that a company should be able to do this and effectively get off scot-free.”
