Phil Anderson

The announcement of another sizeable CSLR cost of $190 million in 2026/27, and the prospect of sizeable special levies for the foreseeable future, is an unsustainable burden for financial advice practices and their clients, while offering little comfort to the victims of financial collapses.

We support the principle of compensation and accountability where misconduct occurs. However, a fair scheme must not undermine the ongoing viability of the advice profession at a time when more Australians than ever are seeking professional advice to help navigate life’s hurdles, including recent major Budget tax changes as well as aged care and NDIS changes.

We urge the Government to cap the total CSLR levy (annual plus special levy) so that financial advisers pay no more than $20 million until we have a sustained increase in adviser numbers. This will ensure Australians do not miss out on the advice they need.

The financial advice profession is made up primarily of small and micro businesses, with an average of only 2.5 advisers per practice. These small businesses have little ability to absorb additional significant costs, and the FAAA’s member survey in April this year shows many are considering leaving the profession and abandoning recruitment plans.

This survey of FAAA members found the CSLR special levy is set to significantly impact Australia’s financial advice landscape, with most respondents saying it will push up costs for clients, accelerate adviser exits and reduce recruitment. Nine out of ten advisers expect the levy to increase the cost of financial advice and 70 per cent of advisers believe the CSLR levy will result in a reduction in adviser numbers^[1]. Whilst the CSLR special levy is labelled as a financial advice sector cost, the Shield and First Guardian collapses demonstrate that many sectors have contributed to the substantial client losses. The special levy must be shared broadly across financial services sectors.

The Albanese Government has shown admirable willingness to provide targeted support for essential industries that are facing significant headwinds. For example, in May 2026, it suspended the Commercial Broadcasting Tax for a further two years delivering $111.3 million in savings for the commercial broadcasting sector. We urge the Government to show a similar commitment to financial advisers.

By Phil Anderson, general manager policy, advocacy and standards

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Notes:
[1] This is reinforced by the ABS June 2026 Business Conditions survey which found that:

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Sarah Abood

The FAAA welcomes the fact that the Federal Government’s proposed changes to CGT and negative gearing in the Budget did not impact superannuation. However it says an unintended consequence is that there is now a substantial tax incentive for Australians who want to invest in established residential property to do so via a Self Managed Super Fund (SMSF) which raises concerns that people will be convinced to do so via high pressure sales tactics without the benefit of financial advice, without a full understanding of the obligations that they are accepting as trustees of a super fund and without appreciating the risks involved with such strategies. 

In its submission on the inquiry on the Treasury Laws Amendment (Tax Reform No.1) Bill 2026 (attached), the FAAA make four recommendations to address these concerns. 

The FAAA will be presenting at the Senate Economics Legislation Committee public hearing today at 10.30am to further discuss the issues.

Read the submission.

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Sarah Abood

A survey of members by the Financial Advice Association Australia (FAAA) shows the Compensation Scheme of Last Resort (CSLR) levy is set to significantly impact Australia’s financial advice landscape, with the majority of respondents saying it will push up costs for consumers and accelerate adviser exits.

The findings show that nine out of ten advisers expect the levy to increase the cost of financial advice, as firms move to pass on the impact of a potential $4,000 per adviser bill. In addition, 70 per cent of advisers believe the CSLR levy will result in a reduction in adviser numbers.

Advisers are calling for the government to make significant changes to the CSLR scheme including:

• 79 per cent want the cost of any special levy spread across the financial services sector on a more even basis
• 63 per cent want to cap the total amount paid by the advice sector, and
• 74 per cent are calling to change AFCA rules to better allow investors to make complaints against the management of MISs and superfunds as a whole.

FAAA CEO, Sarah Abood, said the findings highlight a growing disconnect between the intent of the CSLR and its real-world impact.

“The clear message from advisers is that the CSLR levy will be felt not just by advisers but also by consumers – through higher advice costs and reduced access to advice.

“The financial advice profession is made up primarily of small and micro businesses, with just over 15,100 advisers spread across 6,073 practices – an average of only 2.5 advisers per practice. These small businesses have little ability to absorb large additional costs.

“We are already seeing signs that the levy is affecting both retention of existing advisers, and the pipeline of new advisers. A continually shrinking profession will have long-term negative consequences for access and affordability of advice for everyday Australians.”

Highlighting a growing risk to the sustainability of the profession, nearly seven in ten advisers (69 per cent) expect a material hit to profitability, with 32 per cent forecasting a major impact of more than 10 per cent.

To offset the cost, 79 per cent of advisers say they will be forced to increase client fees.  Others are considering scaling back investment in people, with 36 per cent planning to reduce new adviser appointments.

Further, almost half (44 per cent) report knowing colleagues who are planning to leave the profession as a result of the impact of CSLR, and 9 per cent say they intend to exit themselves, raising concerns about access to affordable financial advice at a time when demand is rising.

“There is strong support amongst advisers for a more balanced and sustainable funding model. Financial advisers should not be bearing a disproportionate share of the cost for failures that occur elsewhere in the system when products collapse, and they should not be paying for the misconduct of a tiny minority of advice businesses that have done the wrong thing,” Abood says.

“We support the principle of compensation for consumers, but the scheme must be fair, sustainable and not undermine the ongoing viability of the advice profession.”

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The FAAA Member 2026 Survey: Impact of the Compensation Scheme of Last Resort (CSLR) Levy was undertaken in March 2026 and open to all FAAA members.  Its purpose was to understand the impact of the CSLR levy (ongoing and special levy) on professional financial advisers.

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The FAAA has seven key recommendations:

• Clarity of Impact. We recommend that the Government makes it very clear that this proposed reform will have no impact on existing providers who have already met the education standard, including via qualification for the Experienced Provider Pathway.
• Support for Existing Financial Advice Education Providers. In undertaking this proposed change to the education standard, we recommend that the transition is designed in a way to support those HEPs who have previously developed approved programs to ensure that they are not disadvantaged and can continue to make their courses available for potential students.
• Existing Approved Programs to Continue. We recommend that the Government allows all existing programs to remain approved and to continue to be available to potential students.
• Guidance for Licensees. We recommend that the Government facilitate the development of guidance for licensees to ensure that they are suitably aware of the criteria for the approval of study by new entrants.
• Inclusion of the Creation of a Statement of Advice in Accredited Subjects. We recommend that consideration be given as to how the creation of a Statement of Advice can be included in the accredited subjects.
• Participation in Curriculum Development. We recommend that the Government include the professional associations in the process to develop the revised curriculum and that ongoing refinement of the curriculum is approached on a co-regulation basis.
• Cost and Funding for Financial Advice Programs. We recommend that the Government consider the best approach to the packaging of financial advice education programs to ensure that courses can be provided in a manner to best enable access to Commonwealth funding and models for the deferral of payment.

Read the submission.

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