Industry funds baulk at Mulino’s CSLR special levy
ANALYSIS
Industry funds are sending the Albanese Government a clear message that they do not want to be part of bail-out packages for the Compensation Scheme of Last Resort (CSLR).
They are OK with retail funds sitting on investment platforms being a part of the bail-out being considered by the Assistant Treasurer and Minister for Financial Services, Daniel Mulino, but they believe “profit to member” funds should not be handed a bill for the misdeeds of others.
The industry funds, represented by the Super Members Council (SMC) have a point, but the reality for Mulino is that he has limited options with respect to funding the special levy necessary to bail-out the CSLR notwithstanding their claims the Government will be shifting cost on to “12 million low-and-middle income Australians”.
Mulino’s options are constrained by the reality that the CSLR is funded by:
- licensees who provide personal financial advice to retail clients on relevant financial products
- credit intermediaries
- engaging in credit activity (within the meaning of the NCCP Act 2009) other than as a credit provider
- securities dealers
Importantly in terms of sheeting home the blame an cost to where it properly belong is that, nowhere on that list sits Managed Investment Schemes (MISs).
In a statement issued yesterday, the SMC said: “The CSLR was created to compensate victims of financial misconduct as a last resort after all other options to recover money had been exhausted. A key design principle was that the parts of the financial services system from which the consumer harms had arisen would bear that cost.
“It would be a clear breach of that principle to force millions of everyday Australians who are members of highly regulated profit-to-member super funds to pay into this scheme,” it said.
The SMC has also argued that “spreading excess costs across unrelated sub‑sectors would embed and escalate moral hazard”.
“If highly regulated parts of the system foot the bill for misconduct elsewhere, it is likely to escalate risky behaviour, weaken accountability, and make some consumers pay twice,” it said.
In this, it is aligned with the Financial Services Council (FSC) which has similarly bemoaned superannuation funds being required to shoulder some of the burden but has suggested that, recognising Mulino’s dilemma, the super sector would be prepared to contribute to a once-off special levy.
The SMC is also in alignment with the core arguments of the Financial Advice Association of Australia (FAAA) with respect to a root and branch redesign of the CSLR funding mechanism to ensure that the scheme is a genuine “last resort”.
The SMC’s statement said it is “calling on Government to strengthen the fairness and integrity of the CSLR scheme by:
- Ruling out cross‑subsidisation of CSLR excess costs by APRA‑regulated superannuation trustees.
- Re‑establishing CSLR as a true scheme of last resort by:
- Removing retrospective elements and setting clear guardrails for any special levy.
- Pursuing targeted Government funding for legacy cases where necessary to reset the scheme.
- Driving regulatory fixes (anti‑hawking, platform oversight, conflict management, subrogation/recovery).
- Consider alternative, fairer funding sources as a short-term stopgap measure while reforms take effect – such as drawing on unclaimed money held by the ATO that has not been claimed after exhaustive efforts.
“SMC reiterates its calls for stronger consumer protections to ensure the bill for CSLR compensation does not continue to mount, including:
- Tightening and enforcing anti‑hawking prohibitions to stop sales tactics that pressure people into risky investments that are unsafe or unsuitable for them.
- Strengthening platform/product regulatory oversight and related‑party conflicts.
- Making those entities pay to fix the problems, instead of passing costs onto others.
oh my god, the hypocrisy. Why should I as an adviser who has never had a client in frozen funds or incurred losses for clients , be then asked to pay for the misdeeds of others . This is what ISF wants , all the benefits of a robust environment with no responsibility .
“profit to member” funds should not be handed a bill for the misdeeds of others.
The most hypocritical ever, Industry Super Funds, are fine that innocent Advisers pay the bill for misdeeds of others.
On a positive note ISF are nearly calling out corrupt Canberra for the retrospective Dixon’s MIS fiasco and Govt not paying its fair share.
So we can just say no and walk away then?
It’s Ironic that Industry Funds on one hand want to be handed the right to act like quasi advisers, but don’t want to pay the costs of being an adviser.
When will the Government & ASIC actually have the balls to stand up to this fund cartel?
This year they have started with illegal incentives to retain funds, and the government have done nothing about this because apparently ethics and conflict of interest laws don’t extend to the Industry aFund cartels!
Now the Government want to give the power to Industry Fund call centres to provide unqualified personal advice to retirees, and the retail advisers will be left to pick up the tab for their inevitable mistakes. This Government cannot be serious???
hi, yes I saw these illegal incentives on tv but forgot the one that was offering. Can you tell me which fund it was? I tried to report this but haven’t seen the add on tv since. I don’t watch enough tv.
There are a number of them offering these unethical and illegal incentives to their clients. Aware Super is one, and I believe Hostplus are also going done this unethical road too.
Ironically the funds are being derived from tax rebate funds that are already the client’s money. They are parading these tax rebates that already should have been redirected back to their beneficial owners as a Bonus Incentive. This couldn’t be more unethical and Industry Funds members who are losing their tax rebates to this BONUS Scam need to report this fraud to ASIC.
Again ASIC are asleep at the wheel. It’s not the first time!
You can only imagine when the Industry Find cartels are given the green light ( ASIC & the labour Government) for their trustees, and call centres to start dealing with highly sensitive personal advice. The law suits that will follow will send CSLR cost through the roof, and these thugs want the retail funds and their advisers to pay for their mistakes. It ain’t happening and retail advisers should be commencing a class action against the government for the return of funds already stolen. This system under the CSLR has already been breached in that it wasn’t used as a ‘last resort’! It was the only mechanism used and no other ways of regaining these defrauded sums of money were pursued because the labour government always takes the easy way out and takes funds by force and without consultation.
It’s an utter disgrace what this government is doing against innocent advisers. They have found another money tree and they are picking the low hanging fruit because the little guy can’t object.
It’s the same way they run our Federal tax system. Only the average worker pays, everybody else gets a free ride, whilst the labour government tax the air we breath!!
Another joke from the SMC – they think they’re special.
No one should be paying this CSLR fee that is not involved with the corruption. Industry Funds are innocent but then so are financial advisers that are paying this rubbish fee. We should all get a refund of the total amount we have been extorted for by the government for years now.
neither do we!
adviser!
ISFs on the other hand a BEGGING Government to charge these same 12 Million low- and middle-income Australians HIDDEN COMMISSIONS to pay for the wealthier and older Retirement Boomers conflicted, in-house single product, FUM retention so called Sales Advice, via uneducated, unqualified backpackers.
Hey ISF’s, how is it going to be fair to make the younger poorer members pay Hidden Commissions for no service for older members ?
Hey ISF’s, how is it going to be fair to have uneducated, unqualified backpackers pretending to be Advisers ?
On the very same theory, why should I pay for the misdeeds of others ?
It wasn’t my financial advice that cost millions of dollars . . . let the criminals pay.
On that basis then, advisers that have done nothing wrong, should not be expected to pay for the wrongs of others!! The whole system is clearly flawed. How Evans and Partners were able to put Dixon Advisory into administration and leave others to pick up the tab whilst they continue on as if nothing ever happened, beggars’ belief. I thought Pheonixing was meant to be illegal in this country??!
The opinions of Comrade Super should be immediately put in the bin.
Aren’t these the same funds that get fined by ASIC and members pay for it?
Aren’t these the same funds that use members retirement money to pay for their celebration dinners?
This makes my blood boil.
The super wars are not dead.
They are well and truly alive.