Jones launches CSLR in Melbourne, fails to address adviser concerns
Advisers are bracing for the Compensation Scheme of Last Resort levy while Jones has hit the campaign trail and officially unveiled the scheme in Melbourne on Monday.
Two weeks after the official launch of the CSLR, Minister for Financial Services, Stephen Jones, has issued a statement, commending the Albanese government for its efforts towards “strengthening the financial system to provide victims of financial services misconduct with access to redress and compensation”.
On his LinkedIn profile, he posted: “In Melbourne this morning launching the new Compensation Scheme of Last Resort. It will support victims of financial malpractice who have no other avenue of redress. Thanks to the Australian Financial Complaints Authority team for the work to get this up and running.”
Expanding on his praise of the CSLR, he added: “The government stands with consumers to ensure there are robust protections in place for them.”
But while the minister pledges his allegiance to consumers, advisers are eagerly awaiting news on potential changes to the CSLR levy they are slated to pay later this year.
The scheme, first proposed by the 2017 Ramsay review and backed by the royal commission, launched on 2 April while Minister Jones was reportedly on leave.
Although the scheme is expected to encourage industry to support strong standards, enhancing trust and confidence in the financial services sector, for financial advisers, who are being asked to fork out $18.5 million for the first full year period, it’s a burden deemed unjust.
Last month, the CSLR revealed that the cost of the first levy period, which will be funded by the government, is $4.8 million, while the second levy is estimated at $24.1 million with much of the cost charged to advisers.
Since these costs were announced, the Financial Advice Association Australia (FAAA) has been vocal in urging the government to intervene, citing the unexpected scale of the levy and its focus on addressing legacy issues.
Joining the ifa Show podcast recently, the FAAA’s general manager of policy advocacy and standards, Phil Anderson, said the FAAA wants to see the government pick up the entirety of the legacy Dixon Advisory matters.
“The business went into administration in January of 2022. The legislation for the CSLR was not passed until June of 2023, so nearly a year and a half later. It received royal assent in early July of 2023. We do not believe that this legislation should be applied retrospectively, and if we are required to pay for complaints that were submitted after the 7 September 2022, but before the legislation was passed, we think that’s wrong,” Anderson said.
“We think that there should not be a retrospective application of the law here. The vast bulk of those post-7 September 2022 Dixon complaints were received in September and into October of 2022. If you take out all of the Dixon Advisory matters, that would be a good outcome. That would significantly reduce the cost. But we would certainly argue that we should not be paying for Dixon Advisory matters that were received prior to royal assent in July of 2023.”
Moreover, Anderson pointed out the levy will only get higher in financial year 2025–26. Namely, according to estimates drawn up by the Actuaries Institute, the Australian Financial Complaints Authority (AFCA) will need until the March quarter of 2026 to complete the processing of legacy Dixon Advisory matters.
“We are talking about the prospect of an even larger number in the financial year 2026,” Anderson said.
“So, this is an issue that we need to argue strongly for, not only this year or the year that’s coming up, but the following year. So, it’s not just about $1,200. It’s probably significantly more in the 2026 year that we certainly want to see the government come to the party on.”
To hear more from Phil Anderson, click here.
