Minister for Financial Services Daniel Mulino has released an options paper for the Compensation Scheme of Last Resort (CSLR) outlining the potential inclusion of SMSFs in the program.
Proposal six of eight proposals outlined in the “Compensation Scheme of Last Resort – reform options to support ongoing sustainability” paper considers “responses to the role of SMSF losses in reducing pressure on the CSLR”.
The paper proposes two reform choices. Option one is to include a subset of SMSFs within the CSLR special levy framework as a potential connected subsector. That subset, or leviable cohort, could be determined through either an opt-in or opt-out mechanism.
Under this proposal, those SMSFs choosing to opt-out of a default position of inclusion would not have to contribute to CSLR funding, but would also not be eligible for future compensation under the initiative, although the paper stated they would continue to have access to Australian Financial Complaints Authority dispute resolution processes.
Alternatively, SMSFs choosing to contribute to the CSLR framework would be granted access to the program’s compensation measures.
As justification for proposal six, the paper noted at 28 February 2026, cases involving SMSF complainants accounted for about “93.1 per cent of all paid and pending CSLR cases, representing approximately $154.14 million in compensation of which $152 million relates to the financial advice subsector and Dixon Advisory”.
Further, it pointed out the average value of compensation awarded in complaints involving an SMSF is materially higher than that awarded to non-SMSF complaints, $130,186 versus $75,980 respectively, with most financial advice-related misconduct cases involving SMSF investments.
The CSLR options paper is one of three released yesterday, with the other two covering the subjects of curbing lead generation activity and enhancing member protections in the superannuation system. All interested parties have until 22 May to make submissions to the three papers, with a second CSLR and consumer protection roundtable to be held in the coming weeks.
“The Albanese government will consider the outcomes of these consultations and progress a series of targeted, proportionate reforms which appropriately balance consumer protection, the risk of future collapses and the right of individuals to exercise choice in the superannuation system,” Mulino said.
