MenuFAAA CEO Sarah Abood has today appealed to government to make urgent and significant changes to the CSLR to ensure fairness and sustainability, following the release of CSLR’s update for the 2025/26 financial year.
“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.
“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.
“The reduction of $2.8 million in the total estimated CSLR cost for the financial advice sector for 2025/26, from $70.1 million to $67.3 million, 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.
“Some of the key developments since the January 2025 initial estimate are an increase in complaints, of 350, for UGC (many of which will not be processed until 2026/27), and the increasing prominence of Brite Advisors, where the revised estimate includes only 10 claims out of the 618 complaints that AFCA has already received.
“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.
“The Government’s plans in relation to the allocation of costs above the $20 million sector cap are unknown – but clearly the financial advice profession should not and cannot cover this. Urgent action is needed to fix the CSLR funding mechanism, otherwise this will decimate the advice profession, further drive up the cost of advice and put professional financial advice completely out of reach for the average Australian.”
