Are Shield Masterfund and First Guardian the next CSLR black swans?
In recent months it seems that there has been an almost constant stream of news about another collapse of an investment firm or action by ASIC against financial advice or investment businesses. Every time we hear this news, we are immediately thinking about the likely impact on the CSLR. Often the impact is not obvious, or the scale of the loss is unclear.
In late May, the CSLR Operator issued a media release highlighting that they have seen multiple large scale firm failures and suggested that at least two of these failures could potentially lead to more than 800 claims. That is very concerning. The CSLR are currently working on an updated estimate of the CSLR Levy for the 2025/26 year, which we expect to hear more on in the next month or so. We fear that the number could be bigger than first expected as a result of these recent failures, however the time it takes to investigate and react to these failures, could push the cost back into the 2026/27 year.
Over the last year, two major investment firm failures have been regularly in the media as more has emerged about the scandal behind them. What has become more evident over time, is that there is a very clear connection between these investment business failures and the advice profession, which increases the prospect of complaints related to these matters landing with the CSLR. These two matters are the Shield Masterfund and First Guardian.
To help the financial advice profession better understand these two matters and their potential impact, we have prepared a short explanation of what we know at this stage. No doubt over coming months, more will emerge and we will have a greater sense of the scale of the exposure.
The CSLR remains a very high priority for the FAAA as we seek to achieve changes to ensure that it is equitable and sustainable for the long term.
By Phil Anderson
