MenuA survey of members by the Financial Advice Association Australia (FAAA) shows the Compensation Scheme of Last Resort (CSLR) levy is set to significantly impact Australia’s financial advice landscape, with the majority of respondents saying it will push up costs for consumers and accelerate adviser exits.
The findings show that nine out of ten advisers expect the levy to increase the cost of financial advice, as firms move to pass on the impact of a potential $4,000 per adviser bill. In addition, 70 per cent of advisers believe the CSLR levy will result in a reduction in adviser numbers.
Advisers are calling for the government to make significant changes to the CSLR scheme including:
- 79 per cent want the cost of any special levy spread across the financial services sector on a more even basis
- 63 per cent want to cap the total amount paid by the advice sector, and
- 74 per cent are calling to change AFCA rules to better allow investors to make complaints against the management of MISs and superfunds as a whole.
FAAA CEO, Sarah Abood, said the findings highlight a growing disconnect between the intent of the CSLR and its real-world impact.
“The clear message from advisers is that the CSLR levy will be felt not just by advisers but also by consumers – through higher advice costs and reduced access to advice.
“The financial advice profession is made up primarily of small and micro businesses, with just over 15,100 advisers spread across 6,073 practices – an average of only 2.5 advisers per practice. These small businesses have little ability to absorb large additional costs.
“We are already seeing signs that the levy is affecting both retention of existing advisers, and the pipeline of new advisers. A continually shrinking profession will have long-term negative consequences for access and affordability of advice for everyday Australians.”
Highlighting a growing risk to the sustainability of the profession, nearly seven in ten advisers (69 per cent) expect a material hit to profitability, with 32 per cent forecasting a major impact of more than 10 per cent.
To offset the cost, 79 per cent of advisers say they will be forced to increase client fees. Others are considering scaling back investment in people, with 36 per cent planning to reduce new adviser appointments.
Further, almost half (44 per cent) report knowing colleagues who are planning to leave the profession as a result of the impact of CSLR, and 9 per cent say they intend to exit themselves, raising concerns about access to affordable financial advice at a time when demand is rising.
“There is strong support amongst advisers for a more balanced and sustainable funding model. Financial advisers should not be bearing a disproportionate share of the cost for failures that occur elsewhere in the system when products collapse, and they should not be paying for the misconduct of a tiny minority of advice businesses that have done the wrong thing,” Abood says.
“We support the principle of compensation for consumers, but the scheme must be fair, sustainable and not undermine the ongoing viability of the advice profession.”
The FAAA Member 2026 Survey: Impact of the Compensation Scheme of Last Resort (CSLR) Levy was undertaken in March 2026 and open to all FAAA members. Its purpose was to understand the impact of the CSLR levy (ongoing and special levy) on professional financial advisers.