SMSF Association calls for urgent action on CSLR

SMSF Association Media Release

The SMSF Association is calling for urgent Government action following the release of fresh data from the operator of the Compensation Scheme of Last Resort (CSLR) showing a more than threefold increase in industry funding will be needed to compensate victims in 2025-26.

SMSF Association CEO Peter Burgess said the Federal Government’s decision to review the CSLR was urgently needed in the face off a massive blow-out in expected compensation claims.

“It is unacceptable that advisers should be expected to pay for the failures of firms such as Dixon Advisory Superannuation Services (DASS) and United Global Capital (UGC).

“We support having the CSLR but it’s important there is confidence that the scheme is meeting its objectives in a way that is sustainable for the industry and consumers.

“The current funding model is clearly unstainable and inequitable, posing a risk to the viability of the advice sector and the CSLR.

“At a time when we are striving to make financial advice more accessible and affordable, the sector is being burdened with a CSLR scheme that punishes ethical advisers for the sins of a tiny minority.”

Burgess said it was estimated that the total cost of financial advice claims to be paid from the scheme in 2025-26 would be $70 million – a significant increase from the previous year – with DASS and UGC expected to account for more than 90 per cent of the claims.

“As this amount exceeds the sector cap of $20 million, a special levy will be needed to make up the estimated $50 million shortfall.

“Given the legislative process that must be followed, it is likely multiple levy invoices will be issued to financial advisers in quick succession, with further levy increases likely in future years. This is not sustainable.”

Burgess said the Government review must consider the objectives of the scheme and whether those objectives were being meet.

It should also examine ways of reducing cost by improving the administrative efficiency of the scheme, and how the stability and predictability of CSLR levies can be improved. Importantly, the review must deliver tangible and timely outcomes.

Burgess noted that “inappropriate SMSF advice” featured prominently in the DASS and UGC implosions.

“This again underlines the importance of specialist SMSF advice. We have always maintained that personal SMSF advice should only be provided by a licensed SMSF specialist. Although this won’t eliminate poor advice behaviour, it will significantly reduce it.”