The upcoming CSLR levy for financial year 2026 is anticipated to exceed the $20 million sub-sector cap for personal financial advice, says the Compensation Scheme of Last Resort.
At CSLR’s first financial industry forum, where it met with key financial sector leaders, the organisation provided an overview of its progress since the scheme launched in April 2024, and the roadmap for the next six months.
In doing so it discussed some of the key assumptions that will be relied upon as it embarks on the “…complex process, with consulting actuary Finity, to formulate the estimate for levy period 3 (FY26).”
It states that it anticipates the upcoming levy will exceed the $20M sub-sector cap for personal financial advice and notes the process of confirming the levy estimate is complex and heavily dependent on:
- The estimates of how many complaints will be resolved by AFCA and proceed to the CSLR in FY26
- The inclusion of any other large scale firm failures
“Whilst the total amount in relation to Dixon post the Pre CSLR allocation is unlikely to change significantly this amount will likely be spread over multiple levy periods depending on the timing of complaints being resolved with AFCA and people subsequently lodging a claim with the CSLR,” it says.
The total levy estimate is expected to be lodged with Parliament when it resumes sitting early next year.
Common themes of misconduct
In addition, the CSLR outlined common themes of misconduct it has observed in relation to personal financial advice:
- Misleading, deceptive advice or unauthorised transactions
- Failure to implement a Statement of Advice
- Failing to regularly review investment strategies
- Advice provided without considering personal situations
- Failure to disclose material information
- Inappropriate linking of SMSF and borrowing to invest in property
CSLR’s CEO David Berry says it’s been rewarding to have paid 91 claimants ($9.1M) in compensation in its first five months of operation.
“These claimants, who previously had no opportunity to recover the loss from their experience with financial misconduct, have now been able to access some form of compensation.”
…we recognise the majority do the right thing and at the CSLR we see the small proportion that undermine the strength of the whole sector…
Berry says that within the financial sector “…we recognise the majority do the right thing and at the CSLR we see the small proportion that undermine the strength of the whole sector. Where we can, we are committed to updating the industry on what we know about future levies as well as providing insights we have gleaned from the claimant’s experience with the sector.”
The CSLR also reiterated its commitment to working closely with Treasury, ASIC, AFCA and the Minister in providing early insights into the operation of its legislative framework.
“While we continue to fulfill our legislative obligation to provide some basic consumer protections, our focus remains on ensuring the CSLR is well positioned to build consumer trust in the financial services industry,” he says.
Click here to see CSLR’s Impact Report including key metrics and observations from the first three months of operation, case studies and a Financial Report.
