The Association of Superannuation Funds of Australia (ASFA) is calling for a redesign of the Compensation Scheme of Last Resort (CSLR), criticising its methodological use of ‘hypothetical’ rather than actual losses and the current funding mechanism.
ASFA benchmarking research conducted by Marsh Risk Consulting compared the CSLR to six mature international schemes across the United Kingdom, United States and Europe. It found the CSLR was the only measure of its kind “funded from the retirement savings of people who cannot claim from it” and which seeks to refund unknown hypothetical losses.
“In Australia, we ask how much an investor would have if they had never received bad financial advice and had hypothetically been put into a better investment option. That pushes the CSLR’s compensation bill higher. The more than 16 million Australians who are members of traditional super funds are now having to help pay that bill even though they can’t claim from the CSLR themselves,” ASFA chief executive Mary Delahunty said.
Delahunty pointed out in the 2026 financial year, $6.1 million of a $47.3 million special CSLR levy was charged to the savings of members of traditional, institutional super funds, and noted those individuals are unlikely to claim on the system as the trustees of public offer funds are already legally obliged to pay compensation.
“It is like being forced to insure not just your own house, but someone else’s house in another town, and then being told the premium will rise every year because the other town keeps burning down,” she explained.
As such, ASFA is calling on the government to only pay compensation when a firm has failed and a consumer has lost their money, and for only the sectors responsible for the losses to fund the compensation.
The superannuation industry peak body also wants the government to invest more in prevention.
“Stopping unregulated lead generators, aggressive sales tactics and conflicted advice from causing these losses in the first place is the most effective way to bring the CSLR’s costs under control,” Delahunty indicated.
