The Compensation Scheme of Last Resort has released its financial year 2027 revised levy estimate, revealing a significant jump across the board despite broker levies edging lower.
The Compensation Scheme of Last Resort (CSLR) has sharply increased its funding ask for FY27, revising the total levy up by $60.7 million to $198.1 million as it braces for a larger wave of personal advice‑related compensation claims.
In its updated FY27 estimate, released on Thursday (2 July), the CSLR said the total levy across the four subsectors would now be $198.1 million, compared with the initial $137.5 million figure published in November 2025.
The scheme’s actuaries have lifted the expected number of claims to 1,567 for the period, up from 912 in the earlier estimate.
The CSLR said that the additional funding would largely be channelled into the personal financial advice subsector, where the revised levy has jumped to $190.3 million from an initial $126.9 million.
It described the increase as “significant” and said the surge was being driven by an anticipated 71 per cent rise in compensation payments in FY27, mainly due to the final cohort of claims related to Dixon Advisory & Superannuation Services (DASS) and the first tranche of cases involving the Shield and First Guardian Master Fund product failures.
Credit intermediation to pay smaller levy
For credit intermediation – the slice that covers brokers – the numbers are more modest.
The CSLR’s revised estimate puts the FY27 levy for the subsector at $2.1 million, a slight reduction from the initial $2.2 million forecast.
Within that, the scheme expects to pay 10 credit intermediation claims during the levy period and to finalise another five.
Yet the CSLR said that the underlying complaint experience for credit intermediation had been firmer than first assumed.
“Complaint experience for credit intermediation has been slightly higher than expectations,” it said.
On claim sizes, the CSLR said there was still “no meaningful experience” for the subsector and therefore retained its previous assumption that the average compensation amount would be around $100,000 per claim.
Other sectors and the special levy
The credit provision subsector’s FY27 levy remains at $2 million, unchanged from the initial figure, while the securities dealing subsector’s levy has been cut to $3.7 million, down from the original $6.5 million.
The personal financial advice subsector, by contrast, has seen its expected levy explode.
With the revised advice levy at $190.3 million and the scheme now forecasting far more advice‑related claims, the CSLR has said that the expected amount for this subsector exceeds the legislated $20 million cap for ordinary levies.
As a result, it is seeking a special levy for FY27, drawing on legislative provisions that allow extra funding to be raised when caps are breached.
CSLR CEO David Berry, explaining the surge and reflecting on two years of operation, said the typical claimant was a consumer who believed they were making a sensible decision seeking professional help.
“Our experience indicates that the overwhelming majority of claimants believed they were taking a prudent and positive step by placing trust in a professional to provide expert advice in a complex financial system. Many are now left feeling as though that this trust was misplaced,” Berry said.
“The majority of compensation paid representing money lost from defective personal financial advice and, in many cases, the compensation paid provides for only a partial recovery of hard-earned savings.”
He also highlighted the reputational and emotional toll of those episodes on the broader industry.
“Unfortunately, we see the disproportionately negative impact of individuals within the financial services sector who have done the wrong thing,” he said.
“That impact weighs upon the whole sector and comes at the expense of the lasting emotional, physical and financial wellbeing of individuals working hard to save for retirement.”
Levy pressure and reform
The revised FY27 estimates land against a backdrop of growing unease over CSLR’s funding trajectory.
The scheme, first launched in 2024, is an independent not‑for‑profit body authorised by the federal government to pay up to $150,000 per claim to consumers who have received a favourable AFCA determination but cannot be compensated by the relevant firm because it is insolvent.
Levies are collected annually from personal financial advice licensees, credit providers, credit intermediaries, and securities dealers to fund those payouts.
Earlier releases showed FY26 levy estimates roughly tripling to around $78 million from $24.1 million the year before, prompting concerns about sustainability and fairness across the industry.
In response, Assistant Treasurer and Financial Services Minister Daniel Mulino asked Treasury to develop options for post‑implementation reform of CSLR to “address potential structural and technical changes to the scheme itself to ensure it remains sustainable”.
In April, he unveiled eight proposals aimed at improving the viability of the scheme’s funding sources.
Three consultation papers are now out for comment: two looking at how to better protect superannuation members and clamp down on aggressive lead‑generation tactics that push consumers into high‑risk products, and a third canvassing targeted technical and structural tweaks to the CSLR’s design.
[Related: MFAA presses for fair share of soaring CSLR bill]
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