Treasury and Govt knew of CSLR funding flaws
ANALYSIS
Some of the earliest submissions to Treasury’s post-implementation review of the Compensation Scheme of Last Resort have already been filed but don’t hold your breath waiting for Treasury to make those submissions public.
If financial planners file submissions to the post-implementation review and want them made public, then they had best publish them themselves. This history Treasury reviews is that submissions only become visible to the public many months after they have been filed.
But, in any case, the terms of reference of the post-implementation review reflect the haste with which it was conceived – just four dot points.
The Treasury web site states as follows:
Scope of the review
The review will improve understanding of the scheme’s operation and the outcomes it is delivering.
The review will consider:
- How the CSLR is delivering on its intended objectives;
- How the CSLR funding model is formulated, including its potential impacts on businesses who fund the industry levy;
- How the powers of the CSLR Operator interact with delivery of the scheme; and
- The current scope of the CSLR and any related matters.
The review should have regard of other current and recent reviews and inquiries as relevant.
At dot point 2, financial advisers could be forgiven for believing that Treasury should have considered the impacts on the businesses who fund the levy well before the underlying legislation was implemented.
Of course, advisers now know that the levy necessary to fund the CSLR is estimated at $50 million above the $20 million sector cap and that by simply ordering Treasury to undertake the post-implementation review, the Government has effectively kicked the can down the road until after the upcoming Federal Election.
What is damning about the Government’s approach to the CSLR and its costs is that it was given early warning of the escalating costs of the scheme driven by the complaints around the collapse of Dixon Advisory with documents released under Freedom of Information confirming Assistant Treasurer and Minister for Financial Services, Stephen Jones, receiving a highly detailed heads-up from Treasury in mid-2022.
The Treasury submission to Jones recommended: “That you note the recent collapse of Dixon Advisory exposes the CSLR to higher costs than initially estimated”.
Sadly, even knowing about the Dixon-driven cost blow-out, Treasury did not recommend Jones “make any changes to the current design of the CSLR”.
“The scheme is appropriately calibrated to effectively respond to the collapse of Dixon Advisory, and support the ongoing financial sustainability of the scheme in the longer-term,” it said.
In short, Treasury’s post-implementation review will not tell the department anything it does not already know and the political outcome will reside in the hands of whichever party holds the Treasury benches after the Federal poll.
Jonesy & Treasury knew they weren’t making Advice more affordable. The exact opposite with Jones Lies and Treasury corruption to fund bureaucrats stung by Dixon’s.
Canberra’s Pollies & Bureaucrats must be exposed for their Lies & Corruption.
Appalling and unaccountable.
A disgrace.
ALP out.
Forget the CSLR payment plan, because this is not a scheme it’s a scam.
Good Financial Advisers should not be paying for the crimes of others, and I call for class action against the Government and ASIC to recoup my losses. I’m sick to death of being targeted by this incompetent government and its corrupted institutions like ASIC who put Advisers through hell for the last ten years for the sins of others.
How many suicides, how many broken families, how many destroyed businesses is enough for these useless bastards.
Their Royal Commission has more than halved the industry in size. It destroyed the ability of the average Australian to afford advice, the exact opposite of its intended goal. The average man can no longer afford good advice.
Now they want to help their industry Fund mates out and create fake advisers that will only provide you the choice of the Industry Fund you already belong to, for a cost of course (I.e. They will allow a vertically funded model like the banks to dominate advice and super and they want Australian retirees to pay for a call centre operator/ adviser to tell you to stay with the fund your already in. Oh but hang-on the banks can’t participate or anyone else).
But wait there’s more we also might introduce a third type of adviser for accountants to carve out a third type of advice, and by the way real advisers must play by our stringent rules but adviser type 2 & 3 you can do whatever you like the rules don’t apply!!!! No paperwork or endless administrative burden for you.
The clients can just pay you a fee to tick a box that makes sure the industry fund your in retains you, and the accountant your with continues to draw an annual fee from you despite the fact your income should now be largely tax free. Let’s just tax the retirees tax-free income more(say the Government accounting lobby’s) so that we have a reason to charge them a fee until they die. That makes sense doesn’t it?
The insurance industry has been wrecked to the point the average person can no longer afford to be insured!!! Advisers couldn’t afford to participate in the industry, and the majority of personal insurance agents were forced to retire prematurely.
Everything the government and its regulators touch they incompetently destroy, and hardworking honest advisers are left to pick up the tab.
The CSLR is just another cash grab paying for the mistakes of the government and the regulators. The crimes of one adviser are not the fault of good advisers and we should not be paying for their crimes.
I call on the Federal Government to Fund the 70m owing via CSLR because of their mistakes in regulation and Stupidity. Advisers should not be paying for the crimes of others.e. Like Dixon Advisory). Their crimes are not our responsibility. Your government was asleep at the wheel, not Advisers. This is not our debt it’s yours, and what you have already taken is tantamount to theft!
The government must commit to covering any shortfall in the CSLR levy that exceeds the $20 million sector cap. This is critical to ensure that the financial advice industry isn’t disproportionately burdened by historical or unforeseen claims.
The $20 million sector cap should only be adjusted in line with inflation, preventing arbitrary increases that could further strain the sector without justification.
Improvements
Any increase in the cap or levy should come with provisions allowing small financial service providers (with operational revenue under $2 million) to pay the levy over a 10-month payment plan.
ASDAA propose that the CSLR levy be made tax-deductible, allowing advisers to subtract this cost from their taxable income, thus reducing their tax liability.
Develop and implement a new, inclusive compensation framework that involves all relevant sectors of the financial industry, including Managed Investment Scheme (MIS) issuers.