Adviser CSLR levy repudiation a dangerous option
Financial advisers who refuse to pay the Compensation Scheme of Last Resort (CSLR) levy are likely to be effectively put out of business by the Australian Securities and Investments Commission (ASIC).
A presentation delivered to the Association of Independently Owned Financial Professionals (AIOFP) conference outlined the powers ASIC can deploy against those who refuse to pay the levy in protest against its disproportionate impact on financial advisers.
The presentation delivered by the AIOFP’s Lionel Rodriques specified ASIC’s ability to impose banning orders, and its ability to suspend or cancel licenses.
Delegates to the conference were urged to support advisers’ need to be heard via Treasury’s current review of the CSLR pointing out the desirability of a change to the CSLR architecture and a broadening of the sub-sector base.
The message from Rodriques was that honest advisers could not continue to keep subsidising criminals and that there were lessons to be learned from the United Kingdom’s Financial Services Compensation Scheme model which is funded by a broader base than that which applies in Australia.
He noted that the UK experience has a broader base of nine “funding classes” – Debt Management, Deposits, Funeral Plans, General Insurance Provision, General Insurance Distribution, Home Finance Intermediation, Investment Provision, Life and Pension Division, Life Distribution, and Life Distribution and Investment Intermediation.
The presentation suggested that in future the CLSR be funded by all industry participants – Fund Managers, Managed Investment Schemes, Superannuation funds, Platform Operators, General Insurance, Foreign Exchange Traders and Consumer Credit Insurance.
Detailing the workflow being handled or likely to be handled by the CSLR regime, it noted
- 2019-2022 Dixon Advisory, $458 Million, 2773 complaints.
- 2023-2024 United Global Capital and Global Capital Property Fund, $85 Million, 538 investors.
- 2025 Australian Fiduciaries, $160 Million, 600 investors.
- 2025 Shield Master Trust/ First Guardian Master Trust, $ 1 Billion, 12,000 investors.
Dealing with the consultation around how the Assistant Treasurer and Minister for Financial Services, Daniel Mulino should deal with the financial advice sub-sector cap over-run to $67l289 million for 2026, the presentation noted his options.
- Spread compensation payments over a longer period of time.
- Apply a special levy to only the sub sector that has exceeded the cap.
- Apply a special levy across additional sub sectors.
- Apply special levy with compensation over a longer period of time.
- Apply a special levy that does not cover the excess.
- Minister may do nothing- no legislative prescription for any action.
The point of the Adviser CSLR boycott is that EVERY AFSL & ADVISER must act together.
It would only work with all involved and then let ASIC try to shut the whole profession down.
Alternatively, ASIC kill us all over 3 to 5 years with $1.5 billion CSLR levies to pay for their useless regulation.
Every single one of theses are property funds or MIA eg all are a product failure and as soon as the product fails its now bad advice lets blame the adviser. Lets ignore ASIC that let them operate in the market gave them their license or the super funds, lawyers, accountants and auditors and rating companies before these can even become an investment option for a financial adviser to even consider honestly it is getting old now.
If financial advisers need to have CSLR we need one for all the lawyers and also accountants so clients have somewhere to complain from getting bad advice. we know this isn’t reported because of the size of the claims are often not large enough to go after from other lawyers and also the cost to chase them is at the person own cost which has normally just lost money caused from the bad advice from lawyers and accoutants.
CSLR for all professions not just financial advisers.
Politicians & Buteaucrats Compensation Scheme. PBCS.
How about they pay levies for their costly stuff ups, Robo Debt $1B, failed IT projects $2.2B, Snowy Hydro 2 was budgeted $2B and is now over $14Billion.
And then useless ASIC that fails the regulate MIS and lost $$$Billions.
Why don’t these Politicians and Bureaucrats pay compensation levies when their industry stuffs up ????
Chuck the NDIS in this list and my power bill. Thanks Albo and Bowen.
At a state level, I’m still absolutely aghast that a ‘charity bin’ machete amnesty box costs $325,000.00 (per box) in Victoria.
What the actual? Who got that contract?
That is filthy.
I can not accept that a few of these advisers were innocent in this. The tentacles of Interprac and AIOFP are too intertwined in this for it not to be
The costs in total should not be raised by a levy on advisers, and it should be a cost to the Government.
This Government is no different to the Coalition government who were responsible for the mess the profession is in.
I know of many advisers who are winding down their businesses as this levy does not make sense.
A class action is needed to take on the Government on this issue. CSLR is our theft. Honest advisers should never have been targeted by this criminal scheme. It’s just another Labour Party source of Tax. That’s all they are good for. Increasing tax and destroying small businesses