On the back of the ACTU taking aim at the government’s suggestion that the pool to pay for the Compensation Scheme of Last Resort (CSLR) could extend to superannuation funds, the SMC has argued any such move would be effectively shifting the cost to the broader Australian public.
According to the SMC, the government “should not hand the bill for the Compensation Scheme of Last Resort to 12 million low- and middle-income Australians”.
“The CSLR was created to compensate victims of financial misconduct as a last resort after all other options to recover money had been exhausted. A key design principle was that the parts of the financial services system from which the consumer harms had arisen would bear that cost,” it said in a statement.
“It would be a clear breach of that principle to force millions of everyday Australians who are members of highly regulated profit-to-member super funds to pay into this scheme.”
Speaking at the FAAA Congress in Perth last week, Financial Services Minister Daniel Mulino conceded that financial advisers have “fairly” pointed out that none of the recent spate of fund collapses are “all about advice”.
“There were other points of failure which we need to investigate and which are being investigated. And that’s a fair point,” Mulino said.
“But part of the challenge just being up front is that what we have are complicated schemes with Shield and First Guardian where, when we think about allocating CSLR levies, we end up looking more broadly across the sector.
“I can just tell you that just about every part of the financial services sector feels frustrated that they’re involved at all. It’s a situation where there’s no straightforward answers and where nobody much wants to be involved in contributing to that levy.
“That’s why I’ve publicly stated that an option is to try to spread it quite widely so as to deal with these issues of not putting too much burden on any particular part of financial services. But I do get that when that kind of option is looked at, many will come back and say, ‘Well, why are we involved?’”
Indeed, that appears to be exactly the question that the SMC has raised, with the group not wanting its members to be drawn into contributing to the $47.3 million special levy for the 2025-26 financial year or the $107 million already expected in FY27.
“Profit-to-member super funds are tightly regulated. They must keep money aside for emergencies and follow strict rules to protect their members. The answer to the Shield and First Guardian collapses is not to send the bill for those risks to millions of everyday Australians in the mainstream super system,” SMC said.
“Spreading excess costs across unrelated sub‑sectors would embed and escalate moral hazard. If highly regulated parts of the system foot the bill for misconduct elsewhere, it is likely to escalate risky behaviour, weaken accountability, and make some consumers pay twice.”
In order to “strengthen the fairness and integrity of the CSLR”, SMC has called for the government to rule out cross‑subsidisation of the excess funding by super trustees, remove retrospective elements from the CSLR, set up special levy guardrails, institute government funding where necessary, pursue regulatory fixes, and look at “alternative, fairer funding sources as a short-term stopgap measure”.
“It’s crucial to close the door to stop consumer harms like these in the first place. Prevention is always better than clean up,” said SMC chief executive Misha Schubert.
“It’s just not fair to ask 12 million low- and middle-income Australians in the highly regulated super system to pay for compensation for other parts of the financial services system.”
