Don’t include us in CSLR funding say super funds

Mike Taylor

Managing Editor and Publisher

27 March 2025

Superannuation funds have made clear to the Treasury that they do not want to be wrapped up into the funding arrangements for the Compensation Scheme of Last Resort (CSLR), arguing that the superannuation sector has a largely unblemished record in paying determinations from the Australian Financial Complaints Authority (AFCA).

In a submission to the Treasury review of the CSLR, the Association of Superannuation Funds of Australia (ASFA) has expressed concern about the cost of the CSLR to the financial advice profession but has argued that is not a reason to expand the funding regime to superannuation funds.

“Given current concerns regarding the funding needs of the scheme and the burden that imposes on impacted sectors of the financial services industry, the review provides an important opportunity to re-examine the scheme’s funding mechanism to ensure it is operating in a sustainable manner,” the ASFA submission said.

“It is also timely to re-consider the scope or coverage of the CSLR, based on up-to-date data pinpointing where in the industry uncompensated losses are arising. We note that it is important to ensure that personal financial advice is accessible and affordable.

“We acknowledge concerns raised by other stakeholders regarding the decline in the number of financial advisers and the impact that the CSLR model in its current form can have on the direct costs of those advisers who have not themselves contributed to the uncompensated losses. We further acknowledge that this may be a factor influencing decisions by potential new entrants to the sector,” the ASFA submission said.

“That aside, ASFA notes there is no data suggesting undischarged compensation is an issue within the APRA-regulated superannuation sector,” it said.

“We maintain our long-standing position that there should be no cross-subsidisation from the APRA-regulated superannuation sector in respect of undischarged compensation arising in other sub-sectors or in relation to products and services not provided by the APRA-regulated superannuation sector.”

The ASFA submission closed with the message that while it might be a good time to review the CSLR and how it is funded, superannuation funds should remain out of the mix.

“It is, in ASFA’s view, an opportune time to reconsider the sub-sectors that are ‘in scope’ for the CSLR, to ensure the scheme is appropriately targeted. However, we are strongly of the view that any extension beyond the presently ‘in scope’ sub-sectors would only be appropriate where there is compelling evidence of undischarged determinations – that is, uncompensated losses,” the submission said.