Stakeholders unanimous – CSLR is a dud design

Mike Taylor

Managing Editor and Publisher

3 July 2026

The financial advice and accounting sectors have been unanimous in their condemnation of the latest rise in the levy estimate for the Compensation Scheme of Last Resort (CSLR) with all stakeholders urging a significant redesign.

The tone was set by the Financial Advice Association of Australia (FAAA) which pointed to the prospect of sizeable special levies being imposed on the advice sector for the foreseeable future and describing it as an “unsustainable burden”.

At the same time, the Stockbrokers and Investment Advisers Association (SIAA) said the revised estimate highlighted the unsustainability of the CSLR.

“The CSLR must be fundamentally re-designed. Now that the scheme is in its third year of operation, its shortcomings are obvious. Alarmingly, the estimate shows that the fees incurred to run the scheme in FY 2027 including AFCA fees exceed the entire personal financial advice sub-sector cap of $20 million,” SIAA chief executive, Maria Lykouras said.

The SMSF Association said the revised levy estimate “plainly underscores the urgent need to address the gross inequities of the CSLR funding, particularly the disproportionate burden being borne by the retail financial advice profession.

FAAA chief executive, Sarah Abood said that while her organisation supports the principle of compensation and accountability where misconduct occurs, a fair scheme must not undermine the ongoing viability of the advice profession.

“We urge the Government to cap the total CSLR levy (annual plus special levy) so that financial advisers pay no more than $20 million until we have a sustained increase in adviser numbers. This will ensure Australians do not miss out on the advice they need,” the FAAA statement said.

It said a survey of FAAA members found the CSLR special levy is set to significantly impact Australia’s financial advice landscape, with most respondents saying it will push up costs for clients, accelerate adviser exits and reduce recruitment.

“Nine out of ten advisers expect the levy to increase the cost of financial advice and 70 per cent of advisers believe the CSLR levy will result in a reduction in adviser numbers,” the FAAA said.

“Whilst the CSLR special levy is labelled as a financial advice sector cost, the Shield and First Guardian collapses demonstrate that many sectors have contributed to the substantial client losses. The special levy must be shared broadly across financial services sectors,” it said.

The SIAA’s Lykouras pointed to the impact of AFCA’s fees on the scheme and the use of a counter-factual ‘but for’ formula when calculating losses.

She noted that AFCA’s fees exceed the entire personal financial advice sub-sector of $20 million.

The SMSF Association chief executive, Peter Burgess also noted the cost of AFCA stating that “unpaid AFCA fees from investigating these claims totalled more than $18.5 million in the fourth levy period, which itself nearly exhausts the subsector cap of $20 million. This figure alone clearly demonstrates the steep increase in unpaid claims since the commencement of the CSLR”.