Treasury Q&A reveals ‘complete disregard’ for CSLR impact

Mike Taylor

Managing Editor and Publisher

23 January 2025

The Government needs to commit to fixing the Compensation Scheme of Last Resort (CSLR) before the upcoming Federal Election, according to the Financial Advice Association of Australia (FAAA).

The FAAA has renewed its calls for Government action on the CSLR with general manger, Phil Anderson issuing yet another position paper which, amongst other things, points to documents obtained under Freedom of Information (FOI) indicating Treasury officials knew how much the regime would cost the advice profession but disregarded the consequences.

The FOI documentation covers are Question and Answer pack attaching to the CSLR legislation and the FAAA’s latest position paper says that the pack “demonstrated a complete disregard for the implications on the financial advice profession”.

It cited the following Q&A:

Q: “Won’t the scheme make financial advice more unaffordable without fixing the real issues?”

A: “Any costs that financial advice licensees face from the CSLR is a direct reflection of misconduct and insolvencies occurring within the sector. The advice sector can reduce those costs by doing [what] it can to eliminate misconduct and insolvencies”.

“The advice profession is furious about this type of comment in the full knowledge that the Dixon Advisory problems had been repeatedly reported to ASIC over many years, and that they took so long to act,” the FAAA position paper said.

“In response to a June 2024 Senate Estimates Question on Notice from Senator Andrew Bragg (Ref BET098), ASIC acknowledged that they had received 60 reports of misconduct in relation to Dixon Advisory between October 2008 and September 2022, and no doubt many were from advisers.

“ASIC’s own submission to the Senate Economics Committee’s Wealth Management Companies Inquiry admits that they initially undertook a significant surveillance exercise with respect to Dixon Advisory in 2015, yet evidently took no action,” the FAAA said.

The position paper said that the FOI information makes it clear the Government was well aware of the scale of the Dixon Advisory scandal back in August 2022 but no mention of the collapse was contained in the Explanatory Memorandum accompanying the CSLR bills.