MFAA presses for fair share of soaring CSLR bill

The discussion followed Treasury’s consultation on options to strengthen consumer protections, tackle misconduct, and put the CSLR on a more sustainable footing.

In that context, MFAA CEO Anja Pannek used fresh data to underline the industry’s contribution to home lending and its relatively clean conduct record.

“Mortgage brokers play a critical role in the Australian home lending market, facilitating 76.7 per cent of all new residential home loans in the December 2025 quarter,” Pannek said.

She contrasted this with complaint levels, adding that “complaints involving brokers account for less than 1 per cent of banking and finance complaints received by AFCA and, based on current FY27 estimates, no CSLR claims are expected to arise from the credit intermediary sector.”

Pannek said that this gap between market share and complaint volume needed to be reflected in how the CSLR was structured and funded.

“These figures highlight the importance of ensuring the CSLR remains fair, proportionate and appropriately targeted. Sectors with strong consumer outcomes, low levels of misconduct and minimal compensation claims should not be required to shoulder an unreasonable share of the scheme’s costs,” she outlined.

Her comments come against the backdrop of an initial CSLR levy estimate of $137.5 million for the financial year 2027 and expectations that the ultimate cost could climb further as major advice‑sector failures, such as Shield and First Guardian, wash through the complaints system.

‘True last resort’ design and levy waterfall

While drawing a clear line on cross‑subsidy, the association backed the underlying consumer protection objective.

Pannel said the MFAA’s submission to Treasury’s CSLR consultation reinforced this balance by supporting the scheme’s core purpose.

“The MFAA supports the objectives of the CSLR as a genuine compensation scheme of last resort,” she said.

“However, it is critical that the scheme’s design and funding arrangements remain sustainable and aligned with its original policy intent as a true last resort mechanism for consumers seeking redress after all other reasonable avenues of recovery have been exhausted.”

To that end, the MFAA has urged that the CSLR only be triggered after options, such as insurance payouts, regulatory enforcement, and recovery from responsible entities, have been pursued.

It has called for stronger recovery tools to be built into the framework, so that more of the cost of misconduct is ultimately borne by wrongdoers rather than by unrelated levy payers.

The association has also advocated compensation settings in financial advice cases to remain focused on direct financial losses, saying that this provides greater certainty around potential liabilities while helping preserve the scheme’s longevity.

A further focus is the special levy “waterfall” mechanism used when scheme costs exceed base levy funding.

The MFAA has backed changes so that sectors most closely connected to the consumer harm contribute first before any residual cost is spread across the wider financial services landscape.

It is also pushing for levy and administrative arrangements that are simpler, transparent, and more efficient, reducing both complexity and overhead for participating firms.

Looking ahead, Pannek framed the debate as a search for symmetry between robust consumer redress and economic reality.

“Achieving this balance will help ensure consumers remain protected while maintaining a fair and equitable framework for the financial services sectors that fund the scheme,” Pannek said.

[Related: CSLR levies land early as backlash over rollout erupts]