The FAAA has renewed its call for urgent reform of the Compensation Scheme of Last Resort (CSLR). It said the financial advice profession cannot continue to absorb escalating costs after being hit with another $190 million special levy for the 2026-27 year – a figure far in excess of the sector’s $20m cap.
Phil Anderson, the FAAA’s General Manager, Policy, Advocacy and Standards, said: “We urge the government to cap the total CSLR levy so financial advisers collectively pay no more than $20 million until we have a sustained increase in adviser numbers.”
…A fair CSLR scheme must not undermine the ongoing viability of the advice profession…
There are currently about 15,000 financial advisers in Australia, and an FAAA member survey conducted in March found 90% believe a higher levy will increase the cost of advice. Seven in 10 respondents also said the levy would contribute to a decline in adviser numbers.
Anderson said: “A fair CSLR scheme must not undermine the ongoing viability of the advice profession at a time when more Australians than ever are seeking professional advice to help navigate life’s hurdles, including recent major budget tax changes, as well as aged care and NDIS reforms.”
While the CSLR special levy is deemed by Government as a cost to the financial advice sector, Anderson said the Shield and First Guardian collapses demonstrate that failures across multiple sectors have contributed to substantial client losses.
“The special levy must be shared more broadly across the financial services sector,” he said.
In the April 2026 Treasury consultation paper on reforms to the CSLR, the waterfall proposal suggested that there would be a cap of $40m on the primary sector, which would mean that the financial advice sector would need to pay a further $20m towards the special levy.
Anderson said the Albanese government has shown admirable willingness to provide targeted support for essential industries facing significant headwinds.
“For example, in May 2026, it suspended the Commercial Broadcasting Tax for a further two years, delivering $111.3 million in savings to the commercial broadcasting sector.”
He urged the Government to show a similar commitment to financial advisers, adding that the FAAA will continue to advocate that as a small business sector, financial advisers should not need to pay more than $20m in total.
See our report: CSLR Levy Fuels Adviser Exit Fears
