Who pays for the $50m: CSLR funding mystery won’t be solved before election

On Friday, financial advisers were hit with a bombshell when the Compensation Scheme of Last Resort (CSLR) released its initial levy estimate for the upcoming financial year.

Calculated with independent actuaries Finity, the figure skyrocketed to a combined $77,975,000 across all sectors.

According to the CSLR, the funds will facilitate the body to process 1,800 claims across the pre-CSLR levy and the FY26 levy estimate and the payment of compensation for 491 claims in relation to the FY26 levy estimate – a three-fold increase in processing volume relative to FY25.

The break down across industries hits financial advisers the hardest, with the vast majority of $70.11 million being attributed to the sub-sector – well in excess of the $20 million sub-sector cap.

The decision on how the additional $50 million will be paid has not yet been announced and cannot officially be made until after 1 July – after the federal election.

Ultimately, all that is for certain is that current Financial Services Minister Stephen Jones will not be the one making the final decision following his retirement announcement on Thursday.

Instead, it will either fall to whoever takes over from Jones if Labor wins the election or current shadow financial services minister Luke Howarth if the Coalition forms government.

Speaking with ifa, CSLR chief executive David Berry explained that the instrument for the $78 million will be lodged with Parliament on Tuesday, which will outline the cost to all four sub-sectors.

This is subject to a 15-day disallowance period, which could potentially be interrupted by an election being called. After this period is completed, the Australian Securities and Investments Commission (ASIC) can issue the levy.

“They can only issue the levy up to the sub-sector cap,” Berry said.

“So, while financial advice is looking at $70 million, ASIC can only levy up to the $20 million.”

This equates to a bill of $1,295 per adviser, leaving as much as $3,300 each still on the horizon depending on what the eventual minister decides to do.

“On the first of July, we can go to the minister and say that there is still a need for a special levy and it's in line with the original estimate, or it might be different,” Berry explained.

“What will happen prior to the first of July is we will do a revised estimate – we're required to do that under the legislation. That revised estimate can be anything from nothing's changed through to a full-blown actuarial assessment, through to a less detailed actuarial assessment.

“At this at this stage, because of the UGC [United Global Capital] assumptions, it will all depend on what we actually see over the next three months.”

While there is the possibility that the revised estimate could see a decrease of the levy amount, there is also a chance it goes even higher.

Regardless of what the revised estimate ends up being, it will be this number that the minister will need to allocate – however this is once again subject to disallowance.

“They've got the three options we've talked about previously, which is ask us to go slow, they can ask us to pay in instalments, or they can levy other sub-sectors – or a combination of any of those,” Berry said.

“Once that minister has made that call and said, ‘OK, this is how we intend to fund the special levy’, that's within their discretion as to the mix or how they do that, but they don't have the discretion to just approve it. They've got to then put that through the parliamentary process, and it will go through a disallowance process again for the upper and lower house to approve.

“Once, once they've approved it, ASIC will be able to administer it.”

The CEO added that while he understands “this is not a message the financial advice sector is going to like”, the CSLR can only operate in line with the legislation.

“We've got a very administrative function, we apply the legislation,” Berry said.

“We don't have the discretion to be to differ from it, but we are highlighting to the parties that can make those decisions where there could be room for improvement.”