Adviser CSLR levy repudiation a dangerous option

Mike Taylor

Managing Editor and Publisher

25 August 2025

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.