{"id":80276,"date":"2025-11-19T09:36:42","date_gmt":"2025-11-18T22:36:42","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=80276"},"modified":"2025-11-25T12:03:36","modified_gmt":"2025-11-25T01:03:36","slug":"faaa-warns-cslr-blowout-threatens-adviser-viability","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2025\/11\/19\/faaa-warns-cslr-blowout-threatens-adviser-viability\/","title":{"rendered":"FAAA Warns CSLR Blowout Threatens Adviser Viability"},"content":{"rendered":"
\"\"
FAAA CEO Sarah Abood speaking at the organisation’s annual conference in Perth.<\/figcaption><\/figure>\n

The escalating cost of the CSLR is shaping up as a major threat to the financial advice profession, FAAA CEO Sarah Abood<\/strong> told delegates in a keynote speech at the association\u2019s annual congress in Perth.<\/p>\n

Addressing a packed audience of financial professionals, Abood said fixing the CSLR remains \u201ca core priority\u201d for the FAAA. She said that while the association \u201csupports the scheme and its importance to consumers,\u201d she warned that its funding model contains \u201cfundamental flaws\u201d that risk its sustainability.<\/p>\n

Abood revealed on Tuesday 18 November that the scheme is now paused, unable to honour new claims after exhausting its available funds. Advisers have already contributed $20m this year and are now awaiting a decision from the Assistant Treasurer and Financial Services Minister Dr Daniel Mulino<\/strong> on an additional $47.3m special levy.<\/p>\n

\"Dr
Assistant Treasurer and Financial Services Minister, Dr Daniel Mulino.<\/figcaption><\/figure>\n

She said the funding burden has been \u201cvastly in excess of Treasury\u2019s initial estimates,\u201d with the CSLR now expects to require $137.5m in FY27, including just under $127m attributable to the financial advice sector.<\/p>\n

\u201cThat\u2019s potentially over $8,200 per adviser on our current numbers, if we end up with the full amount,\u201d she told congress attendees.<\/p>\n

The estimate does not include possible claims from the collapses of Shield and First Guardian, which actuaries say are still too uncertain to quantify.<\/p>\n

Abood also referenced CSLR CEO David Berry<\/strong>\u2019s warning that the rate of financial firm failures \u201cdoesn\u2019t seem to be slowing\u201d.<\/p>\n

Financial advisers didn\u2019t set up these funds and they didn\u2019t cause their collapse…<\/p><\/blockquote>\n

Turning to the Shield and First Guardian failures, Abood said as much as $1.2bn is at risk for almost 12,000 investors, \u201cthis could represent the biggest funds failure in Australian history \u2013 eclipsing even the almost $1bn lost in the Pyramid Building Society failure\u201d.<\/p>\n

\u201cFinancial advisers didn\u2019t set up these funds and they didn\u2019t cause their collapse,\u201d she said. \u201cThe lion\u2019s share of the blame in this matter unquestionably lies with the funds themselves \u2013 the directors and investors, the conflicts of interest and related party deals.<\/p>\n

\u201cASIC has disclosed that it is investigating a total of 140 individuals and entities in relation to this collapse, across a range of different players.<\/p>\n

\u201cIt looks like our challenge here is not changing the law, it\u2019s getting better at detecting breaches, and faster at enforcement.\u201d<\/p>\n

Abood reiterated the FAAA\u2019s call for special levies to be \u201cspread as broadly as possible\u201d across all sectors covered by AFCA.<\/p>\n

\u201cIt\u2019s unjust and unsustainable that any business should be called upon to compensate consumers they didn\u2019t harm, to such an extent that it threatens their viability,\u201d Abood said.<\/p>\n

\u201cIt is absolutely crazy to drive good and compliant businesses out of a sector by forcing them to compensate the clients of the bad and non-compliant businesses.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The escalating cost of the CSLR is shaping up as a major threat to the financial advice profession, FAAA CEO Sarah Abood told delegates in a keynote speech at the association\u2019s annual congress in Perth. Addressing a packed audience of financial professionals, Abood said fixing the CSLR remains \u201ca core priority\u201d for the FAAA. She […]<\/p>\n","protected":false},"author":23,"featured_media":80328,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[282,241],"tags":[],"class_list":{"0":"post-80276","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-associations","8":"category-conferences-and-events"},"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/80276","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=80276"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/80276\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/80328"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=80276"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=80276"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=80276"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}