The Compensation Scheme of Last Resort (CSLR) funding model is fundamentally flawed and urgently requires reform. Requiring the financial planning profession to shoulder a disproportionate share of compensation costs is also unsustainable.
Speaking this morning on the opening day of the SMSF Association’s National Conference being held in Adelaide, CEO, Peter Burgess said while the principle of spreading CSLR costs more broadly across relevant sectors is sound, there must be clear limits – one such limit is superannuation.
“Using superannuation savings, whether held in APRA-regulated funds or self-managed superannuation funds (SMSFs), to plug regulatory and product-failure black holes sets a dangerous precedent.
“It socialises the cost of misconduct and systemic failure by shifting it onto individual fund members and does not align with the Government’s own legislated objective of superannuation – to preserve savings to deliver income for a dignified retirement.”
“Every day Australians should have confidence that their superannuation savings are being preserved to support their retirement rather than being used as a ‘honey pot’ to fund black holes.”
Burgess said, with the industry facing an even larger special levy for FY2027, the conversation about who should pay will continue.
“However, protecting consumers against unscrupulous operators including industrial-scale misconduct requires more than just fixing the CSLR – it requires a much broader industry response.”
“To this end we support the Government’s broad agenda to strengthen consumer protection in the superannuation and financial services sectors.”
“We need a regulatory framework that can detect and readily respond to instances of poor conduct before it becomes a large-scale systemic failure resulting in significant consumer loses.”
Weighing in on the recent conversation about “cooling off” periods for super switches, Burgess questioned the merits of such an approach.
“While we understand the “sand-in-the-gears” concept as a means of slowing down super switching decisions and giving people more time, rolling over funds to an SMSF for example is rarely a quick transaction, so it’s unclear how adding further sand-in-the-gears would make any difference.
It’s risks adding further cost and complexity and reducing portability for very little benefit, Mr Burgess said.