After earlier pledging to make a number of changes to relieve the pressure placed on advisers by the Compensation Scheme of Last Resort (CSLR), the Coalition has taken a further step, confirming it will seek to remove “situations like the Dixon Advisory collapse” from the scheme.
Removing where “vertically integrated advice businesses shed their liabilities and the CSLR foots the bill”, the Coalition said in a document shared with ifa.
This will be addressed alongside efforts to reduce the scheme’s excessive administrative costs and consider the findings of Treasury’s ongoing review of the CSLR – following the Coalition’s implementation of the first round of relief, which includes reinstating the $10 million subsector cap and excluding “but for” compensation for hypothetical capital gains.
“We will start by putting in place a plan to provide immediate certainty and reduce costs for this year,” the Coalition said, pledging also not to issue any “special” levies for this year.
Speaking at Momentum Media’s Election 2025 breakfast event in Sydney earlier this month, shadow assistant treasurer and shadow financial services minister Luke Howarth argued the CSLR should be scrapped entirely.
In his address, Howarth said the CSLR was “pretty well a disaster”, adding that he doesn’t agree with the premise of the scheme.
While he outlined that a Coalition would reform the scheme, he told financial services delegates at the event that “I don’t even believe in the CSLR”.
In a Q&A session following his address, he said: “I think the whole thing’s stupid. It’s ridiculous … It’s not a go at anyone who’s running it … The reality is it shouldn’t have been set up to start with.
“So, we don’t want to expand it. That’s the last thing we want to do. We want to get rid of it, ultimately, and we want to reduce the cost, until we can do that, for advisers.”
At the Election 2025 event, shadow treasurer Angus Taylor confirmed that the Coalition would “fix the CSLR’s costs, making it fair and sustainable”, suggesting that the fee structures were “onerous”.
“We’re conscious of the fact that this has been a big impost on your industry,” he told advisers in the room, adding that the cost of supporting the scheme was “preventing people from serving their clients” and “making it harder”.
Also at the event, while outgoing Financial Services Minister Stephen Jones acknowledged that “reform is needed”, he stressed there are no quick fixes.
This followed earlier comments from the minister that the review of the CSLR would not be expanded to include managed investment schemes (MIS).
“I want to ensure that what’s occurring doesn’t become a backdoor mechanism to drag that stuff in,” Jones said in reference to MISs last month.
“The conscious reason for doing that, it was going to add a whole bunch of risk into a compensation scheme that I don’t think is sustainably manageable.”
