SMC urges Govt to rethink CSLR cost spillover burden

Yasmine Raso

Senior Journalist, Financial Newswire

19 December 2025

In the wake of new superannuation fund tax receipts data released on Thursday as part of the government’s Mid-Year Economic and Fiscal Outlook (MYEFO), the Super Members Council (SMC) has renewed its calls urging the government to reconsider forcing profit-to-member funds to also shoulder the burden of any Compensation Scheme of Last Resort (CSLR) cost blowouts.

With superannuation fund tax receipts already revised up by more than $4.3 billion in 2025–26 and $10.1 billion over the four years to 2028–29, the peak industry funds body said in a statement that the millions of low- and middle-income members should not be responsible for the $47.3 million special levy bill “due to financial misconduct from others in high-risk products”.

“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,” the SMC said.

“The Government would be breaching that principle by forcing millions of everyday Australians who are members of highly regulated profit-to-member super funds to pay into the scheme.

“If those in highly-regulated and well-run parts of the system foot the bill for misconduct elsewhere, it will escalate risky behaviour creating moral hazard, weaken accountability, and make some consumers pay twice.”

The SMC also noted that self-managed super funds (SMSFs) – despite approximately 80 per cent of CSLR claims relating to advice within that sector – would not shoulder the levy in 2025-26.

The council urged the Government to focus on implementing reforms to “strengthen consumer protections, close regulatory gaps, and prevent future harm”, including:

• Tougher laws to stop sales tactics that pressure people into risky investments that are unsafe or unsuitable for them;
• Stronger platform/product accountability, regulatory oversight and related party conflicts; and
• Making those who cause harm pay to fix it, instead of pushing costs onto others.

“Despite a record super tax windfall, the Government is making poorer Australians pay for financial misconduct in riskier financial schemes,” SMC Acting CEO, Georgia Brumby, said.

“We need to see genuine reform, not just unfair levies, to ensure the scheme is sustainable.”