Financial adviser pleas on CSLR funding fall on deaf ears
ANALYSIS
Financial advisers will be funding much of the cost of the Compensation Scheme of Last Resort (CSLR) because, In the end, the three-year-old report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry continues to prevail.
The Royal Commission recommended the establishment of a CSLR and politicians have demonstrated again that they are not going to be in the business of failing to implement one of its recommendations.
What will be disappointing for financial advisers is that Australian Labor Party (ALP) politicians, when in opposition, were advocating for the inclusion of MISs in the funding arrangements but dropped that position once they gained Government – as demonstrated by the Senate Economics Committee report albeit that the Assistant Treasurer and Minister for Financial Services, Stephen Jones, has signalled the Government may look at it down the track.
At the end of the day, the scope of the CSLR does not marry up to the range of matters covered by the Australian Financial Complaints Authority, which includes MISs and financial advisers will pay the price.
The Senate Economics Legislation Committee has recommended that the CSLR legislation pass the Parliament without amendment, despite the fact that it continues to place the weight of funding on financial advisers rather than product manufacturers, particularly managed investment schemes.
Just how much financial advisers will need to ante up to fund the CSLR remains to be announced, but it will be in addition to the cost of the ASIC levy which in turn will be influenced by the Single Disciplinary Body which sits under the ASIC umbrella.
The Senate Committee noted that the CSLR framework creates a levy against relevant financial services industry entities to fund the scheme, to an overall scheme levy cap of $250 million.
The committee also noted that some stakeholders (read financial planning organisations) raised concerns about the levy and its impact on the industry, but then promptly moved on to state that “this view was not shared by all stakeholders, with many submitters articulating their support for a forward-looking, industry-funded CSLR.
“Treasury argued that it was appropriate for the one-off levy to be funded by the top 10 firms, given their capacity to pay,” the committee report said.
Despite a concerted effort on the part of the major financial planning groups to have product providers included in the funding of the CSLR, the committee ultimately decided to accept the word of Treasury.
“The committee recognises the concerns raised by stakeholders within the financial services sector regarding the proposed CSLR. While the committee acknowledges these concerns, it is reassured that Treasury has engaged in an extensive consultation and design process with industry, and that this process has produced a rational framework that addresses those concerns. The committee is persuaded by the evidence from Treasury and other submitters in the financial services sector who articulated their support for a forward-looking industry funded CSLR,” it said.
Government, Labor and Treasury need to be told by ALL Real Advisers to go and GET STUFFED !!!!!!
Yet again Advisers blamed for Product failures.
I share your frustration. But the war is lost. Financial planners simply don’t have the numbers or the associations to lobby with any impact.
For one that has looked, there’s a big world out there, that value our skill sets do your blood pressure a favour and move on. Good luck.
I’ll be doing exactly this and exiting this profession/industry in the next few months. I’m done with this.
And, I’m one of the advisers already qualified to continue beyond 2026 had I chosen to do so.
The very best of luck!
Thank you…and to you too!
Not only do we not have the political clout, but Labor financially gains multi-millions per year by keeping their union super buddies and the rivers of gold well & truly protected, and as we’re seen to be the enemy of ISA, we’ll always be persecuted while this corruption remains.
‘Follow the money’ is the famous adage in solving crime & corruption, same with any recent rule changes that seem to be in our favour, (like potentially relaxing SOA requirements etc), as they’re only being considered because union super will get the greater aggregated advantage.
oh, and in case anyone forgot, this is all possible because ASIC IS CORRUPT.
Have the powers making these decisions considered how many more advisers will leave the industry based on this decision alone? I imagine there will be many exiting, including fully FASEA qualified advisers. Advisers I speak with are exhausted from being systematically bludgeoned by bureaucracy for way too long!
Expecting financial advisers to fund the CSLR while excluding MIS and product manufacturers from participation in funding is ludicrous. This decision would appear to absolve entities responsible for the damage to the industry’s reputation and transfer responsibility for financing the scheme to practitioners only.
It’s hard to believe some ninny (this is the nicest semi-derogative word I could think of without swearing) decided it should be forward-looking industry funded CSLR when in reality much of the damage was created by the self-interest of vertically integrated organisations.
And do not start me on the ASIC levy…shakes head in disgust…
“Treasury has engaged in an extensive consultation and design process with industry” – That statement is utterly laughable. They haven’t listened to one thing!
Disgusting and unfair. Last straw and there won’t be funding if all Advisers just leave. Congratulations the unbalanced compliance economy vastly out strips the remaining advisers. Pointless.