CSLR special levy based on promises impossible to | Australian Markets

The most applicable option for coping with the FY26 Compensation Scheme of Last Resort levy blow-out is to impose a special levy on a giant quantity of sub-sectors underneath the ASIC Industry Funding Model that spreads the burden as extensively as attainable, in accordance to the Stockbrokers and Investments Advisers Association (SIAA).

The organisation bluntly said that the “essentially makes promises it can’t afford to keep”.

It mentioned imposing a special levy on all retail-facing sub-sectors is “the least worst of the 5 choices and in related fashion to the Financial Advice Association of Australia (FAAA) and The Advisers Association (TAA) the Government had to pull its weight.

“The government must pay an amount that accords with the remaining 9 months of the first year of the operation of the scheme. This reflects the original version of the scheme that was presented to industry. It also serves as a proxy for the failure of the regulator to deal with the Dixon Advisory and UGC matters in a more timely fashion,” the SIAA advised the Treasury session.

As nicely, it mentioned the personal financial adviser sub-sector should be excised from the levy to account for the truth that the entities on this sub-sector are already required to pay a $20 million levy.

“Many licensees in this sub-sector will also be impacted by a special levy imposed on all retail-facing sub-sectors as they fall within other sub-sectors such as corporate advisers, securities dealers and managed discretionary account providers. This will result in these licensees being required to pay a special levy in addition to the personal financial advice sub-sector levy,” the SIAA mentioned.

“Responsible entities should be required to pay a substantial portion of the special levy to reflect the fact that failure of managed investment schemes is a key driver of the FY26 levy blow-out,” it mentioned.

The SIAA mentioned that the CSLR scheme “should be redesigned to make sure that special levies in future outcome from a ‘black swan’ occasion reasonably than business as ordinary.

“The imposition of a special levy should not be something that happens year after year,” it mentioned.

“Once the Minister has handled the FY26 levy blow-out, session is needed with industry to re-design the scheme. The quantity of leviable sub-sectors should be elevated to align with the circumstances giving rise to claims.

“If losses resulting from the failure or poor performance of managed investment schemes are to be accepted by the CSLR, responsible entities of managed investment schemes must be included as a primary leviable sub-sector with its own $20 million cap,” the SIAA mentioned.

Further, it mentioned an important part of any redesign of the CSLR will contain inserting important checks and balances on AFCA.

“The payment of compensation to wholesale clients is not the intended objective of the CSLR. The government must amend AFCA’s operating rules to ensure that it is unable to accept complaints from clients that have been classified by the relevant licensee as wholesale,” the submission mentioned.