CSLR declares likely underspend
In what represents a rare slice of good Compensation of Last Resort (CSLR) news for financial advisers, the scheme has announced that an underspend will occur this financial year.
The CSLR said that the status of lodged claims likely to be paid in the current financial year against the $24.1 million levied will not be fully utilised.
“The claim volume originally estimated in December 2023 is expected to eventuate, however, claims have taken longer than anticipated to reach the CSLR, and will be received in FY26,” the CSLR said.
The result is that the underspend will be utilised in forward years.
Commenting on the likely outcome, CSLR chief executive, David Berry said that beyond DASS, the CSLR has seen multiple large-scale firm failures within the personal financial advice sector, with at least two of these failures potentially leading to more than 800 claims.
“These failures continue to significantly impact the amount of compensation likely to be paid in the coming financial years. The key driver to the timing of payments remains the speed at which the CSLR receives claims.”
“The projected underspend will be utilised to pay compensation in subsequent financial years and be offset against the FY27 levy estimate,” Mr Berry said.
In line with a lower number of claims paid, the CSLR operating costs are tracking below the levy estimate.
The CSLR continues to focus on ensuring eligible victims of financial misconduct are supported in line with its legislative mandate.
Notice everything in this country is now about compensating for some grievance? The mind boggles how the investor never seems to take responsibility for their own poor decisions. If someone suggests you invest in X stock, or Y m.i.s then surly the investor should at least take the time to do their own research and at minimum maybe google what they are being suggested they invest into?
And what I should be happy about this like China is with the USA dropping their levy from 145% to 30%. Thats right lets tell the planners an unrealistic amount so they accept paying for something they shouldn’t be anyway shall we. Seriously – we are not that stupid.
The big news in this announcement is the prospect of multiple large scale firm failures that are likely to hit the CSLR. There is a reference to two of these leading to more than 800 claims. It is unclear if this is 800 each, or 800 in total. If we used an average of $100k per claim, and 800 claims each, then this would amount to at least $160m, none of which has been previously disclosed or included in the estimates and projections. It does not take much to work out that this must be Shield Master Trust and First Guardian. ASIC has already named the short list of licensees that are involved in these two matters. One large licensee is listed against both of them. We can only watch to see how long this all takes to play out, however it does not look good.