The Compensation Scheme of Last Resort’s special levy for the 2027 financial year has been revised upwards to $191.8 million – an increase of $60.7 million over the initial estimate.
As expected, the vast majority of that figure ($190.3 million) is attributable to personal financial advice, which means the special levy is at least $12,000 per authorised representative. Per the scheme’s statement, this increase is largely due to the final batch of Dixon Advisory claims and the first group of claims related to Shield and First Guardian.
Based on the revised levy report from the CSLR’s principal actuary, Finity Consulting, Dixon accounts for around half (46 per cent) of the scheme’s advice-related costs for FY27. Dixon claims for the period increased by $29 million to about $90 million; Finity’s report said this was due to operational efficiencies at AFCA, which has indicated that it will be able to process all remaining Dixon complaints in the 2027 financial year.
The biggest contributor to the revised levy, though, was Shield and First Guardian. In its initial levy estimate report, Finity described the two collapsed funds as a “significant area of uncertainty,” adding that the FY27 levy could end up materially higher “if it becomes clearer that Shield and First Guardian claims are likely to be paid [during this period].”
That’s exactly what has come to pass, and the CSLR is now expected to pay around $38 million in Shield and First Guardian-related claims (inclusive of AFCA fees) over the next 12 months – and that’s without factoring in Interprac Financial Planning.
As the report explained, no provision has been made for Interprac claims in the levy estimate as it is currently solvent. However, as Interprac is the largest advice firm implicated in the Shield and First Guardian failures – representing 1,277 of the approximately 3,500 relevant claims lodged with AFCA as at 30 April – the report said Interprac’s CSLR eligibility “will materially affect the ultimate claim costs.”
Were the estimate to include Interprac, the report said the potential cost could increase to around $150 million. And if Finity included all current complaints, including those not within the scope of the CSLR, costs would increase to $200 million.
“More broadly, we estimate that if every affected investor ultimately were to be CSLR-eligible, and were to be compensated, then the total First Guardian/Shield claims payable by CSLR could be in the order of $900 million,” the report said.
Commenting on the levy, CSLR chief executive David Berry said: “The CSLR has now been in operation for two years. Our experience indicates the overwhelming majority of claimants believed they were taking a prudent and positive step by placing trust in a professional to provide expert advice in a complex financial system. Many are now left feeling as though that this trust was misplaced.”
“The CSLR has now paid over $200m in compensation to more than 1,600 victims of financial misconduct,” Berry added.
SMSF Association chief executive Peter Burgess said the levy “confirms the unacceptable burden placed on financial advisers.”
He added that while consumers should have access to financial compensation, “holding a sector accountable for the failures of firms that intentionally prioritise profit to the detriment of their clients is both unsustainable and unjust.“
In a statement, Financial Advice Association Australia general manager policy, advocacy and standards Phil Anderson described the revised levy as a “further blow” to accessible financial advice.
“The announcement of another sizeable CSLR cost of $190 million in 2026/27, and the prospect of sizable special levies for the foreseeable future, is an unsustainable burden for financial advice practices and their clients, while offering little comfort to the victims of financial collapses,” Anderson said.
