Qualified advisers are the ‘only potential relief’ to CSLR levy

On 18 March, the CSLR board publicly released estimates of what advisers will be expected to pay for the first full year of the operation of the scheme – which starts on 1 July 2024.

The CSLR estimate for the first levy period is $4.8 million, which will be funded by the Australian government. However, the second levy period is estimated at $24.1 million, with financial advisers expected to fund $18.5 million or $1,186 per adviser.

Speaking on the ifa Show podcast last week, the Financial Advice Association Australia’s (FAAA) general manager of policy advocacy and standards, Phil Anderson, pointed out a number of issues regarding the manner in which the CSLR burden imposed on advisers has been calculated.

First and foremost, he said, advisers are being charged for legacy issues, meaning they’re being asked to cop the cost of complaints received against Dixon Advisory in the period preceding the royal assent of the CSLR legislation.

As such, the FAAA wants to see the government pick up the entirety of the legacy Dixon Advisory matters.

However, Chris Garlick, executive manager for compliance, risk and technology at Guideway Financial Services, offered an interesting potential solution to the burdensome cost.

Posting on LinkedIn, Garlick said: “It’s becoming increasingly evident that the only potential relief for financial advisers from the CSLR and the financial adviser levy hinges on the possibility of its extension to qualified advisers in its calculation.

“Should qualified advisers contribute to restoring the numbers of personal advice advisers to pre-royal commission levels, it could effectively halve these levies.”

Speaking further to ifa, Garlick said advisers need to approach the news rationally.

“We know how much the [CSLR] levy is now and people are reacting to that emotionally and want it removed or reduced. But that levy, just like the financial advice levy, has been enshrined by legislation. To change that levy, we need legislation to do it. Legislation isn’t something that happens in the short term,” he said.

“What advisers should be really focusing on is making sure that qualified advisers, or whatever they end up calling them, get included in the levy’s calculation.”

The advice profession is still waiting for the government to reveal the final look of the qualified adviser proposal, but what’s certain is that superannuation funds, banks, and insurers will re-enter the advice arena in the near future. Superannuation funds are said to already be increasing their adviser count.

“With super funds significantly bolstering their adviser numbers, plus banks making a few comments, saying they’re keeping a close eye on things and maybe re-enter [advice], it’s very important that qualified advisers get included in the levy calculation to ensure the levies get distributed equitably,” said Garlick.

To ensure that qualified advisers are included, Garlick said the FAAA’s ongoing advocacy work will be imperative.

“It’s in the FAAA’s interests and all the wider industry’s interests to advocate for it, because the CSLR needs to be sustainable over the long term.”

Moreover, the executive manager expects the qualified adviser cohort to boost overall adviser numbers to nearly 25,000 in the foreseeable future.