Aggregators lash elevenfold jump in brokers’ CSLR special levy

Credit intermediaries face a proposed $7.79 million special levy for 2026–27, compared with approximately $668,000 previously, about 11.7 times that amount.

Including the ordinary annual levy, the subsector’s combined contribution would approach $9.9 million.

The allocation forms part of Treasury’s first application of its CSLR waterfall framework to distribute a $170.26 million shortfall arising in personal financial advice.

The special levy for 2026–27 was officially tabled in both houses of Parliament on 13 October. If the motion makes it five days without being disallowed, it will automatically be enacted.

Sale challenges the link between broking’s risk and its bill

Sale told The Adviser that the proposed charge did not adequately recognise the sector’s compliance obligations, complaint levels, or contribution to consumer choice.

“When this was first announced, outsource had the firm belief that the allocation was excessive and totally out of proportion to the risk profile of our sector,” Sale said.

“It has been proven time and time again that mortgage brokers operate in a highly regulated environment and generate very low complaint levels relative to the number of consumers they assist.

“Given our industry’s strong compliance record and contribution to competition and consumer choice, we cannot see how this out-of-proportion figure is justified!”

Asked whether the proposed contribution was proportionate given that the shortfall arose in personal financial advice, Sale said the allocation departed from her understanding of a user-pays approach.

“Definitely not! If the shortfall arose from failures in personal financial advice, which it has, and not that of our sector, it is difficult to justify credit intermediaries being allocated such a significant portion of the levy,” she said.

“It should be a user-pays model, but that only works when the costs are borne by the sectors that generated them.”

Sale added that the special levy’s size relative to the sector’s ordinary annual contribution reinforced her concern that the waterfall mechanism was displacing risk-based funding principles.

“Put simply, it tells us the model is out of whack and needs to be reviewed (yet again). A special levy that is more than 3.5 times our annual CSLR contribution suggests the risk-based funding principles are being overridden by the waterfall mechanism,” she said.

“Some cross-subsidisation may be necessary, but this has crossed the line into an unfair transfer of costs.”

Current allocation could widen brokers’ future exposure

Buchanan’s objection, meanwhile, centred on the policy precedent, arguing that an apparently modest individual increase should not deter scrutiny of how the costs were distributed.

“The devil is in the detail here. A ‘small’ increase from roughly $30 per annum to $50 per annum might be easy to overlook for some, but when you get into how the fee was allocated and the precedent that it sets, it is quite concerning and needs more transparency and frankly, a better policy,” he told The Adviser.

“Brokers account for roughly 1 per cent of the remediation yet are required to pay for 5 per cent of the scheme. Essentially being asked to cover the fees of a related but different industry in financial services. It is not proportionate and strikes me as another Labor strike of the pen without consultation.”

Buchanan further warned that accepting the present allocation could normalise greater cross-sector contributions in the future.

“It sets a dangerous precedent. Effectively, the government has started sharing another sector’s financial burden with us, and whilst it has started small, it sets a precedent and allows for creep,” he said.

“So this year it is roughly 5 per cent, but what is now to stop the future state being 30 or 50 per cent, perhaps more?”

Buchanan said that brokers needed to be removed from the levy, citing their insurance obligations and what he described as a small contribution to complaints and remediation.

“We should be carved out from the levy as the risk profile is different to that of financial services,” he said.

“There is a strong argument that broker clients are already sufficiently covered, and so why does our sector need to contribute at all?”

Compliance specialist rejects cross-subsidisation as aggregators back collective action

Greg Ashe, director of QED Risk Services, which provides broking compliance and credit licensing services, expressed frustration at the proposed allocation to an industry he considered disconnected from the scheme’s cost blowouts.

“I am outraged for the whole industry. How can they think it’s OK to tax our industry when it has nothing to do with the CSLR blowouts?” he told The Adviser.

Ashe rejected cross-subsidisation entirely, arguing that the direction of funds in credit transactions distinguished their consumer risks from those associated with financial advice.

He also maintained that including businesses within a broader financial-services funding pool did not justify making one sector responsible for another’s losses.

“There is something fundamentally wrong about asking an unrelated business sector to cover the damage caused by another sector,” he said.

“There should be no cross-subsidisation. Costs should be borne where they originated. If this proves to be a barrier to entry, then so be it.”

For Sale, the consultation’s conclusion did not end the dispute, adding that industry representatives would continue seeking a review rather than accept the proposed distribution as settled.

“Our objective is simple: a fair and equitable outcome that reflects the original intent of the scheme,” she said.

Asked whether she supported a formal aggregator working group engaging the Treasury, the Australian Securities and Investments Commission (ASIC), and the CSLR operator on future estimates and allocation metrics, Sale confirmed discussions had already begun.

“Short answer is yes! Industry discussions are already underway,” she said.

Buchanan also endorsed the proposed working group, reiterating his objection to shifting the costs of one sector’s failures to another.

“Absolutely. This is robbing Peter to pay Paul,” he said.

[Related: MFAA challenges proposed 1,000 per cent surge in brokers’ CSLR levy]