AIOFP backs calls to pay CSLR levy ‘under protest’

In a letter to members, Association of Independently Owned Financial Professionals (AIOFP) executive director Peter Johnston relayed Hamilton Locke partner Simon Carrodus’ “sensational recommendation” that advisers reserve their legal rights when paying the Compensation Scheme of Last Resort (CSLR) levy “under duress”.

Carrodus referred to K&L Gates partner Jim Bulling having previously made a similar suggestion around payment of the levy.

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“I agree with Jim Bulling that advice firms should consider making the CSLR payment accompanied by a ‘under protest and without prejudice’ notation,” Carrodus said.

“There is almost unanimous agreement that it is unfair to require the broader advice sector to cover the financial liability left in Dixon’s wake. This liability should be excluded from the CSLR regime.”

Johnston told AIOFP members that the association suggests sending the following declaration to both the Australian Securities and Investments Commission (ASIC) and the CSLR when making the levy payment:

“I, [name details] are formally advising both ASIC and CSLR that I am paying the CSLR/DIXON levy under protest, without prejudice and reserving my future legal rights.”

Johnston added: “Use the same email address for both via ASIC on cost.recovery@asic.gov.au. ASIC CEO Greg [Yanco] is expecting your correspondence. This strategy will allow you to claim back any levy you have already paid if NACC discovers any corrupt conduct, and the Dixon component is subsequently expunged from the legislation.”

In July, the AIOFP informed Financial Services Minister Stephen Jones that it had referred its concerns around the role “Treasury bureaucrats” have played in the construction of the CSLR to the National Anti-Corruption Commission (NACC) for investigation.

While the NACC has not provided anything in the form of a ruling on the complaint, Johnston said the AIOFP has spoken with the complaints commission and were informed that the “NACC will advise within 30 days of submission if the matter is either not in their jurisdiction, not a corruptible offence or they need more information”.

“We are now over 60 days since our complaint without NACC contact, strongly suggesting NACC is in the second stage of its investigations and taking the matter seriously,” Johnston said.

“Some members have asked whether Minister Jones will be subject to NACC investigations. As ‘Commander and Chief’ of financial services, we assume the buck stops with the person who approved the structure of the legislation, we therefore expect the minister will be interrogated at some point.”

The drastically escalating costs of the CSLR, particularly as it relates to the costs of the Dixon Advisory collapse, had seen some advisers calling for a boycott of the scheme altogether.

However, speaking at ifa’s Adviser Innovation Summit in Melbourne in June, Financial Advice Association Australia (FAAA) general manager policy, advocacy and standards Phil Anderson explained the FAAA would not support a boycott because of the negative impact it could have on advisers’ businesses.

“I have looked at this and I have checked, the interest rate is 20 per cent,” Anderson said at the summit, which was met with concerned groans from the audience.

“Ultimately, the government will get you. I do not encourage you to put yourself in a position where you can leave yourself exposed to ASIC taking action against you and ultimately paying a 20 per cent interest penalty on it.”