ISCOVER
The government is calling for feedback on the CSLR special levy and is considering options such as spreading out compensation payments over time.
Assistant Treasurer and Minister for Financial Services Daniel Mulino has launched a consultation into the Compensation Scheme of Last Resort (CSLR) special levy, seeking feedback on options, including spreading compensation payments over time, applying a special levy to the primary subsector, or extending the levy to other subsectors.
Mulino was notified in July that the CSLR’s estimated claims costs relating to personal advice in 2025–26 were $67.3 million, exceeding the $20 million limit on levies that can be applied to the advice subsector to fund claims.
That triggered the option available to the minister under the CSLR legislation to raise a special levy to pay for the excess costs.
“I have asked Treasury to consult on all statutory options available to deal with this matter. The paper seeks feedback on a broad range of options to inform my decision,” Mulino said.
Mulino added that feedback would also inform the CSLR post-implementation review.
Stakeholders can provide submissions to the consultation until 29 August 2025.
CSLR under review
For the 2026 financial year, it is expected that the credit intermediation subsector – which includes brokers – will pay $1.8 million, down from the original estimate of $2.7 million as part of the CSLR.
CSLR levies were reduced by 32 per cent last month, following revised estimates.
The need for updated figures was triggered due to the initial levy estimate, issued in January 2025, exceeding the $20 million subsector cap for the personal financial advice subsector.
The personal financial advice subsector saw a decrease of $2.8 million, with the CSLR notifying the Minister For Financial Services that a special levy of $47.3 million would be needed.
Will broker associations put forward feedback?
Projected cost blowouts in the recent levy period – related to the collapses of Dixon Advisory and UGC – have brought the CSLR under scrutiny.
In December, the Mortgage and Finance Association of Australia (MFAA) provided a submission to a Parliament inquiry into the collapse of Dixon Advisory, encouraging former assistant treasurer Stephen Jones to “balance fairness and sustainability” when determining how the finance industry will cover the excess costs.
Speaking to The Adviser about the latest Treasury consultation, MFAA CEO Anja Pannek said the industry body will be responding with a submission later this month.
“We are carefully working our way through the consultation paper and the proposals that the Treasury has put forward in the document. Member engagement will be a key part of shaping our response,” Pannek said.
“Our submission will be consistent with the clear position we have maintained across multiple consultations – including Treasury’s post-implementation review of the CSLR, the inquiry into the regulation of wealth management companies, and various related submissions.
“We remain of the view that there should not be cross-subsidisation between sub-sectors under the CSLR. As we’ve highlighted in previous submissions, the mortgage and finance broking industry consistently delivers strong outcomes for consumers, operates within a well-regulated environment, and has low levels of complaints and unpaid determinations.”
Similarly, a spokesperson for the Finance Brokers Association of Australia (FBAA) told The Adviser that the organisation would be providing a submission but it was too early to provide any information at this point.
First launched in 2024, the CSLR is an independent, not-for-profit body authorised by the Australian government that facilitates the payment of up to $150,000 in compensation.
The organisation aims to offer recompense to consumers who have received a favourable determination from the Australian Financial Complaints Authority (AFCA), but haven’t been paid by the financial firm responsible for the complaint due to insolvency.
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