The New Minister for Financial Services Daniel Mulino will launch another consultation on the Compensation Scheme of Last Resort to canvass options for the special levy.
The minister was notified in July, as required by law, that the estimated claims cost related to personal advice for FY26 would exceed the $20 million subsector cap, coming in at $67.3 million.
“I have asked Treasury to consult on all statutory options available to deal with this matter,” Mulino said in a media statement late on Friday afternoon. “The paper seeks feedback on a broad range of options to inform my decision.”
Stakeholder feedback on this matter will also inform ongoing consideration of the CSLR as part of a post-implementation review announced earlier this year, the minister said.
The latest consultation will canvass all options, from taking no action, to spreading the compensation out over time, to a special levy for the primary subsector or a special levy for other subsectors.
The paper notes that previously the 10 largest financial institutions paid the $241 million pre-CSLR levy, but that this was one a one-off and couldn’t easily be repeated.
However, it may be possible to generate a similar outcome using one or more of the ASIC industry funding sub-sectors as a proxy by identifying sub-sectors with a small number of AFCA members that have a significant capacity to pay.
Mulino hinted at a Financial Services Council event earlier this week that the CSLR could be broadened to include other parts of the financial services ecosystem, and acknowledged that investment losses are caused by “different part of the ecosystem” beyond advice.
“We now have a lot more understanding as to how it’s operating,” Mulino said last month.
“We do need to think about all the different components of what can lead to investor losses and think about this in a holistic way.
“I expect that going forward, if we’re going to do deal with this in a way that is sensible and pragmatic, but also that limits losses, limits how much is going into the CSLR, we’re going to have to think about a range of actions.”
A review into the scheme was triggered earlier this year after the CSLR said the FY26 levy would blow well past $70 million with further estimates for FY27 expected to reach past $123 million.
FSC chief executive Blake Briggs welcomed the Minister’s engagement on the CSLR special levy.
“In considering whether and how to determine a special levy, the minister should have regard to the risk of entrenching further moral hazard into the scheme through underwriting investment losses, the financial sustainability and viability of sub-sectors, and spreading the cost as widely as possible to minimise the burden on any one sector,” Briggs said.
“We encourage the Minister to prioritise responding to the outcomes of Treasury’s review of the design of the scheme.”
