It’s unclear at this stage how many of the roughly 15,400 registered financial advisers will come off the Financial Advisers Register when the education deadline hits on 1 January 2026, though at the start of June, ASIC warned that more than 4,600 advisers were yet to meet the qualifications standards.
Combined with the broader impact of fewer planners on the ability for Australians to access financial advice, it will also increase the cost of the Compensation Scheme of Last Resort (CSLR) levy, given it is calculated based on a per adviser basis.
Association of Independently Owned Financial Professionals (AIOFP) technical expert Lionel Rodrigues explained that, on the back of the CSLR levy bill for the FY2025-26 landing on licensees’ desks last week, things are likely to get more expensive going forward.
“These levies only reflect the CSLR levy up to the $20 million cap. The funding required is for $67.30 million. Therefore, a further ‘special levy’ may be raised, for the balance of $47.3 million,” Rodrigues said.
“In my presentation to members at the Gold Coast conference, I explained that Minister Mulino has discretion in how he applies/raises a special levy; see s1069H (1) –(6) Corporations Act 2001.
“I also explained that the good minister is not obliged to apply a special levy as there is no legislative prescription for him to do so. Currently, the minister has called for consultation on a ‘statutory option’ as to how to deal with the current CSLR levy amount.”
The current levy puts the cost to each adviser at around $1,295 for the subsector cap amount of $20 million; however, he explained that the cost would jump to $4,532 per adviser if the special levy was not spread to other sectors.
“I also alert you to the fact that I have confirmed with the CSLR operator that the 2027 CSLR levy is budgeted to be $127 million,” Rodrigues added.
“By way of conjecture, this then may result in a levy of $8,466 per adviser assuming 15,000 advisers share the levy.
“At 8,000 advisers, the result could reflect a total CSLR levy of some $15,875 per adviser. I stress however, that these calculations are hypothetical and subject to various regulatory imposts depending on the licence conditions.
“With investor losses mounting and reported via AFCA, there appears to be substantial increases in future CSLR levies unless the architecture of the CSLR is changed.”
These numbers are, of course, based on a range of assumptions, with the main one being that the minister levies only the advice subsector.
AIOFP executive director Peter Johnston added that the numbers get “frightening” if the Shield and First Guardian collapses result in even larger losses being levied on the advice profession.
“Why would anyone want to become an adviser and why would anyone want to be an AFSL licensee doing ASIC’s ‘dirty work’ of collecting the cash from advisers who are fleeing the profession? This has the ingredients to create a ‘civil war’ in our profession with consumers being the greatest loser,” Johnston said.
“As we have previously suggested, now is the time to write or visit your local sitting federal member of Parliament to alert them to the potentially dire circumstances.
“It seems unfair that Minister Mulino is confronted with such a pivotal decision so early in his ministerial tenure, but unfortunately, his predecessor allowed the FSC-inspired CSLR amendments to pass through the Senate under his watch.”
He said the AIOFP has pushed for any special levy decision to be deferred until the CSLR structure is amended.
The profession seems to be in a death spiral due to government inaction and regulatory incompetence.
The prospect of another 4600 leaving in December is incomprehensible for a country with an aging population.
Depending on the First Gaurdian and Shield Master Fund administration, the costs of that could easily run into the hundreds of millions. Government needs to find a way to make the CSLR sustainable and expecting advisers will cover the bill is not acceptable.