Natasha Panagis, head of technical services for the Institute of Financial Professionals Australia, said the association welcomed the government’s confirmation that self-managed superannuation funds will remain excluded from the CSLR levy.
“Requiring SMSFs to contribute would be inequitable given they cannot ordinarily access the Australian Financial Complaints Authority (AFCA) or benefit from the CSLR,” she said.
“However, reports that the government may consider extending CSLR shortfall levies to SMSFs from 2027 are deeply concerning. Unadvised SMSFs cannot lodge complaints with AFCA and advised SMSFs can only complain about services provided to the fund by an AFCA member, not the decisions of their trustees, meaning SMSFs remain ineligible for CSLR compensation.”
Panagis continued that by asking SMSFs to fund a scheme they cannot use amounts to double dipping when their adviser is already contributing.
“SMSFs already bear the full consequences of their own investment decisions and should not be made to subsidise misconduct in unrelated parts of the market,” she said.
“Expecting them to pay for failures elsewhere in the system is inequitable, inappropriate and simply unjustified.”
Peter Burgess, CEO of the SMSF Association, told SMSF Adviser that the current CSLR funding model is fundamentally flawed and requires urgent reform.
“Requiring the financial planning profession to bear such a disproportionate share of CSLR compensation costs is clearly unsustainable and inequitable. While we support spreading CSLR costs more broadly across relevant sectors, we do not support the inclusion of the superannuation sector — whether APRA-regulated funds or SMSFs,” he said.
“Superannuation savings should not be used for this purpose and it sets a dangerous precedent if the government is able to dip into people’s superannuation savings like this. There are alternative funding sources that should be fully considered before the government turns their mind to the superannuation sector.”
Burgess continued that it should be noted there have been collapses within the managed investment scheme sector that have directly resulted in CSLR compensation claims, yet this sector is currently not subject to a CSLR levy.
“This imbalance must be addressed. Further, the government is the only stakeholder with direct control over the regulatory framework. Where CSLR claims arise due to regulatory failure, inadequate enforcement, or flawed policy settings, it is entirely reasonable that the Government itself contributes to the cost of compensation,” he said.
“A funding model that places most of the burden on compliant financial advisers is neither fair nor sustainable. Meaningful CSLR reform must be guided by principles of fairness, accountability, and long-term sustainability, and cannot afford to be kicked down the road with prolonged consultation.”
The IFPA stated that overall, it supports the decision to spread the 2025-26 CSLR special levy across all 23 retail-facing sub-sectors of the financial services industry, rather than primarily burdening financial advisers.
Last week, minister for financial services, Daniel Mulino, announced a $47.3 million special levy for 2025–26 following the collapse of the Shield and First Guardian Master Funds. The levy will be applied across advice, platforms, superannuation trustees, responsible entities, and other retail-facing businesses.
Scott Heathwood, IFPA president, said the move recognises the basic principle of personal responsibility.
“For too long, compliant advisers have effectively been treated as the chequebook of last resort for failures they did not create. Broadening the CSLR levy base is a sensible step that acknowledges the role of platforms, product issuers and other retail-facing businesses in the ecosystem that failed thousands of ordinary investors,” Heathwood said.
He added that independent and boutique practices already face significant regulatory, licensing and professional indemnity insurance costs.
“If government wants high quality, conflict-free advice available to everyday Australians, it cannot keep piling costs on to the very professionals who stayed within the rules while others pushed the boundaries,” he said.
“A broad-based levy that aligns cost with responsibility is a more disciplined and sustainable approach than treating advisers as an open-ended funding source.”
