Financial advisers should not have to pay more than the $20m CSLR sector cap, says the FAAA’s CEO Sarah Abood.
In responding to Treasury consultation on the CSLR Special Levy for 2025/26, Abood states the amount above the cap – $47.3m for this year – should be allocated to the broadest possible range of sectors on the basis of their capacity to pay.
She said that if the levy is spread as broadly as possible, it is likely to be more sustainable and pose less risk of threatening the viability of any one sector.
“It’s not appropriate to ask financial advisers to pay more than the sector cap,” she said. “Particularly when you bear in mind that the vast majority of this levy is paid by small, privately owned firms with limited capacity to absorb extra costs.”
She said collapses such as Dixon Advisory, United Global Capital, Brite Advisory, Shield, and First Guardian, all point to a key product failure element.
“To attribute all these losses to financial advice and to provide no mechanism to allocate these losses more fairly will result in the CSLR becoming unsustainable and ultimately collapsing,” she said.
“We are aware of suggestions that the sector or sectors considered most culpable should pay the excess. However, this approach would not give any sector certainty or ability to plan for future costs.”
Abood said it’s not appropriate that consumers should miss out by delaying payments to them until the cumulative sector cap payments are sufficient to cover their full losses.
Consumers are entitled to feel safe when engaging with regulated financial services…
“Consumers are entitled to feel safe when engaging with regulated financial services, and every sector in financial services benefits from consumers having confidence in the system,” she said.
“Importantly, deciding what to do with the special levy does not fix the fundamental flaws in the funding model of the CSLR.
“Failings in the financial sector often incorporate a range of players, including responsible entities, investment managers, research houses, superannuation funds, platforms, advice licensees, advisers and auditors.”
Abood also repeated her request the Government reinstate the abandoned Senate Inquiry Into Wealth Management Companies, and broaden its scope to include the collapses of Shield and First Guardian.
“These failures are complex and must be fully investigated to ensure we understand what went wrong – and how to stop them occurring in the future,” she said.
