Super fund trustees, along with responsible entities and other ‘retail facing’ sub-sectors are set to pay for the CSLR levy based on ‘ASIC regulatory effect’.
In an announcement on 10 December ahead of an industry roundtable on the Compensation Scheme of Last Resort (CSLR), Financial Services Minister Daniel Mulino said the government is “acting to strengthen consumer protections and improve stability and confidence in the superannuation and financial services sectors which are critical to investment and productivity”.
According to the minister, superannuation trustees will have to pay 12.9 per cent of the $47.3 million special levy.
“Supporting consumers includes ensuring the CSLR is there to support them when they need it,” Mulino said.
“A special levy of $47.3m will apply for the financial year 2025-26 to fund the increased call on the CSLR this year. This will be applied broadly to reduce the burden on any one sub-sector and to ensure of the sustainability of individual sub-sectors and the CSLR as whole.”
While the levy is to be spread more broadly than just the financial advice sub-sector, it is still set to take the heaviest hit. Advisers will have to pay for 22 per cent of the additional amount, or around $10.4 million.
Credit providers will pay 15.3 per cent, responsible entities will cover 13.7 per cent, super trustees 12.9 per cent, and all other sub-sectors are on the hook for less than 10 per cent each.
According to the announcement, the decision for the 2025-26 special levy is “not taken to set a determinative precedent for levy decisions in future years”.
In November, the CSLR published its initial levy estimate for FY27, with the total calculated at $137.5 million.
As is the case with prior CSLR estimates, the financial advice sub-sector is set to bear the lion’s share of the cost at $126.9 million – $106.9 million above the sub-sector cap.
In a fact sheet accompanying the announcement, Treasury said basing the funding option on regulatory effect would “reduce the risk of the special levy impacting the ongoing viability of any sub-sector”, while acknowledging the broader financial system benefits from ongoing consumer confidence generated by ensuring access to last resort compensation arrangements.
It also “leverages an existing framework and metrics for apportioning costs across sub-sectors, enabling application of the levy framework to be efficient, effective, and transparent”.
“We are acting in partnership with industry and consumer advocates. That is why today I am hosting a roundtable on the CSLR, where we will discuss the special levy and some of options on the table for post-implementation reform,” Mulino said.
“We will also be looking at options for professional indemnity insurance, and I will work with Assistant Minister for Productivity, Competition, Charities and Treasury, Andrew Leigh, to consider how the misuse of insolvency processes can allow financial advice firms evade Australian Financial Complaints Authority (AFCA) determinations.”
The minister also flagged that the government will release an options paper on post-implementation reform of the CSLR in early 2026.
“This will address potential structural and technical changes to the scheme itself to ensure it remains sustainable,” he said.
“Building trust in the financial system will support the government’s productivity agenda. Defective schemes attract funds that should otherwise support innovation and economic growth.
“And when financial schemes collapse, investor confidence diminishes alongside. Australians become more cautious about investing and this can tarnish even legitimate, well-regulated products.
“This work will maintain confidence in the Australian financial system, paying dividends for consumers and the economy as well as delivering a stronger superannuation system so Australians can have a dignified retirement.”
Impact of Shield and First Guardian
The minister’s announcement also leaned heavily on the damage that the Shield and First Guardian Master Funds have done to the Australian public’s confidence in the financial system.
Earlier this week, ASIC announced it is suing superannuation trustee Diversa Trustees over deficiencies around First Guardian, alleging it failed to conduct adequate due diligence before allowing its members to invest and failed to conduct adequate ongoing monitoring.
The corporate regulator has already taken action against Macquarie Investment Management and Equity Trustees over the same issues.
“We need to ensure consumers continue to have trust in the superannuation system to help them provide for their own retirement,” Mulino said.
“The alleged practices employed in the cases of the Shield and First Guardian Master Funds have highlighted the need for reform.
“Those include high pressure lead generation pushing people to switch their retirement savings into higher risk environments and products such as low-quality managed investment schemes.”
Mulino added that the government is considering “targeted reforms” to deal with the issues across the whole ecosystem, with a consultation expected early next year.
“We want to ensure consumers can be properly informed before making the decision to switch what are now large sums of superannuation savings, and more protected when they switch,” he said.
“Switching to a better performing superannuation fund can significantly improve the retirement outcomes for Australians, however, the decision to move requires careful consideration.”
