CPA Australia calls for fair and sustainable solution to CSLR funding

• Proposed CSLR changes unfairly shift costs onto investors, particularly SMSFs
• Urges a fair, sustainable funding model where sectors responsible for losses contribute appropriately

In a joint submission to Treasury, CPA Australia, Chartered Accountants Australia and New Zealand (CAANZ) and The Institute of Public Accountants (IPA) are calling for proposals to shift Compensation Scheme of Last Resort (CSLR) costs onto self-managed superannuation funds (SMSFs) to be reconsidered, warning it will unfairly burden investors while failing to address the true causes of financial losses.

Richard Webb, Superannuation Lead at CPA Australia, said singling out specific categories of retail investors for reduced statutory rights would not resolve the CSLR’s funding challenges.

“Singling out specific groups of retail investors for the loss of statutory protections won’t fix the unsustainably expensive CSLR levy. It simply shifts costs onto investors while ignoring the upstream drivers of loss – including product failures and misconduct prior to advice and distribution,” Mr Webb said.

The call comes amid rapidly escalating CSLR levy costs, which are projected to rise from just $4.8 million in 2024 to $75.7 million in 2026, and could grow to$127 million by 2027 – far exceeding the $20 million subsector cap and highlighting structural issues in the scheme’s funding model.

Mr Webb emphasised that the CSLR must operate as a genuine last-resort scheme, supported by effective oversight and accountability right across the financial system.

“For the CSLR to deliver the greatest benefit, it must truly be a scheme of last resort, and that means the upstream links in the chain must work properly. A sustainable model requires all sectors responsible for those losses – particularly managed investment schemes – to contribute fairly,” he said.

“It’s critical that costs caused by product failures are internalised by relevant product issuers, rather than being borne by unrelated sectors through special levies. 

“Strong product governance must be incentivised, rather than increasing systemic risk and cross-subsidisation.”

Mr Webb said proposals to shift costs onto SMSFs were poorly designed and risked undermining confidence in the system.

“Making SMSFs fund the CSLR directly is poor policy, especially given that the current funding problems were caused by earlier failures. The people responsible for those losses should pay for them – not the investors who were harmed. 

“The current CSLR regime already shows the unfair and disproportionate cost burden imposed on currently registered financial advisors and extending this to SMSFs simply compounds the problem.”
CPA Australia is calling for a holistic approach to CSLR funding, including product providers and relevant service providers, to ensure accountability across the financial services sector while maintaining fair protections for all investors.

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Adrienne Biscontin
External Affairs Lead
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0429 009 691