CSLR releases revised levy estimate

The Compensation Scheme of Last Resort (CSLR) has released a FY26 revised levy estimate, coming down slightly from the figure estimated in January.

The CSLR said the need for a revised estimate was triggered due to the initial levy estimate, issued in January 2025, exceeding the $20 million sub-sector cap for the personal financial advice sub-sector.

With the assistance of CSLR's principal actuary, the revised estimate for the 2026 financial year has been calculated at $75.698 million, down from the initial estimate published in January of $77.975 million.

The key movements in comparison to the initial FY26 estimate are in the personal financial advice sub-sector, seeing a decrease of $2.821 million and the securities dealing sector, with an increase of $2.38 million.

"As the personal financial advice subsector estimate exceeds the sub-sector cap of $20 million, the scheme has notified the minister for financial services of the need for a special levy of $47.289 million," the CSLR said.

Meanwhile, the revised estimate for the securities dealing sub-sector is $4.7 million. The $2.4 million increase will be funded by CSLR's cash reserves and recovered in the FY27 annual levy for securities dealing.

CSLR chief executive David Berry said the harm caused by those in the finance sector doing the wrong thing disproportionately impacts and detracts from those acting correctly.

Berry noted that the rate and number of firm failures show little sign of abating.

"Whilst we are disappointed at the need for a special levy, we recognise these funds provide a measure of compensation for those who have experienced lengthy and stressful financial loss," Berry said.

"The CSLR continues to operate in alignment with the legislative framework in a manner that is effective, efficient and economical as we strive to increase consumer trust across the financial services sector."

Following the revised levy, FAAA chief executive Sarah Abood appealed to government to make urgent and significant changes to the CSLR.

"In the face of the further deterioration in the long-term outlook for the CSLR, it is increasingly critical that government steps in to fix this problem," Abood said.

"We are keen to see the release of the Treasury report into the CSLR and the government's response. The problems will rapidly get substantially worse if urgent action is not taken, putting the ongoing existence of the scheme at risk."

Abood said the small reduction of $2.8 million in the total estimated CSLR cost for the financial advice sector is because of a delay in the processing of known complaints, not a reduction in expected claims.

"Effectively this will push a significant additional cost into the 2026/27 year," she said.

"Further, and most importantly, these numbers do not include any allowance for the impact of either Shield or First Guardian, although numerous announcements by ASIC suggest these are very substantial matters where financial advice complaints are likely.

"This paints a picture of multiple years of claims that are substantially above the sector cap. The vast bulk of CSLR claims have been generated by a small number of medium to large firms, and by the collapse of financial products: a sector that currently makes no contribution at all to consumer compensation under the CSLR.

"In contrast, the vast majority of those paying these levies run excellent compliant small businesses - 92% of advisers work in firms with 10 or fewer advisers - who have not done anything wrong."