Calls for change as CSLR levy hits $137m
The Financial Advice Association Australia (FAAA) and Financial Services Council (FSC) have reacted to the news that the latest Compensation Scheme of Last Resort (CSLR) levy will be $137 million.
Earlier this week, it was announced the initial levy estimate for FY27 will be $137.5 million. As with prior CSLR estimates, the financial advice subsector is set to bear the lion’s share of the cost at $126.9 million – $106.9 million above the subsector cap.
Across the subsectors, there are a total of 912 claims in the FY27 estimate – 841 of which fall under the financial advice banner. As the expected amount for the personal financial advice sub-sector will exceed the $20 million cap, a revised estimate will be completed in June 2026 that will allow the CSLR to request a special levy for the FY27 period after 1 July 2026.
Based on adviser numbers on the Financial Adviser Register (FAR), the sum equates to more than $8,300 per adviser.
Commenting on the news, FAAA chief executive Sarah Abood noted the levy may yet grow further once complaints regarding Shield and First Guardian are understood, which will likely again fall on the financial advice sector.
“This puts a focus on the need to address sustainability of the CSLR as well as the need for greater certainty with respect to the funding. We have been saying for some time that it is imperative that financial advisers should not pay more than the $20 million sector cap which is already very high, particularly when you bear in mind that the vast majority of this levy is paid by small, privately owned firms with very limited capacity to absorb extra costs.”
Meanwhile, Blake Briggs, chief executive of the FSC, said: “The FY2027 estimate again includes another significant breach of the financial advice sub-sector cap, this time by a staggering $106.9 million. Without urgent reform to the CSLR’s design, special levies on industry will again be required to meet the gap for the foreseeable future.
“This is another blow to law abiding financial advice businesses who face continued cost pressures and who will again be called on to pay up to the $20 million sector sub-cap, and potentially above it, for the wrongdoing of others.”
He particularly expressed concern about the use of ‘special levies’ which he described as being “unpredictable” for the industry and operating as a de-facto tax on businesses.
“The wider financial services sector is willing to do its part to meet the existing shortfall, provided the costs are distributed widely and fairly. A diversified approach avoids disproportionate impacts on individual subsectors and reduces the risk of cross-industry disputes.
“However, socialising the cost of underwriting investment losses is not a sustainable long-term solution for a scheme that is on track to have continued cost blow outs into the foreseeable future.”
Richard Webb, financial advice spokesperson for CPA Australia, added: "This is yet another disproportionate and punishing outcome for advisers who have acted responsibly. Legal and regulatory reforms in 2024-25 squeezed the sector already. Now these levy hikes could drive many more advisers out, just as Australians need them most.
"The sector cannot go on like this. Financial advisers are paying the price for failed products and individuals who have left the industry, leaving the rest to pick up the tab. An effective CSLR must protect genuine victims without collapsing the whole advice system. We urgently need a levy model that is actuarially sound, legally capped and fair to today’s professionals and their clients.”
All three organisations urged the government and the assistant treasurer to make active changes to the scheme which would ensure its fairness and sustainability.
Latest CSLR data shows more than 551 claims have been paid since operations began in April 2024, with the majority going to victims of Dixon Advisory and Superannuation Services.
Covering the latest figures as of 31 August, the organisation said 551 claims had been paid totalling $54 million in compensation. This included $750,000 in FY24, $48 million in FY25, and $5 million in FY26 so far.
The largest volume of claims (291) related to those victims affected by Dixon Advisory and Superannuation Services who received $31.9 million in FY25 and $4.8 million in FY26 so far, qualifying as personal financial advice.
Meanwhile, investment and advice complaints to the Australian Financial Complaints Authority (AFCA) increased 18 per cent in the 2024–25 financial year, according to its annual review, hitting 4,193.
The primary issue driving this increase in complaints was a failure to act in the clients’ best interests, which saw a 124 per cent increase in FY25, up from just 565 last year, accounting for almost a third (30 per cent) of all complaints in this category.
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Laura Dew
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