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.”
ASIC, in its surveillance and investigation into misconduct role, as well ability to halt these schemes at a whim (preventer of mess), could do with a dose of accountability here. Especially as it has been widely documented that they were tipped off in regards to misconduct of these schemes many years ago (likely before the $100s of millions stage).
Where established that ASIC has knowingly been under-resourced to properly perform this important function, the respective political party in power should be forced to cough up. (think the inconceivable amount of money being diverted & likely wasted here in Australia on net zero initiatives & respective grants). This puts accountability back on the political party – they will think hard before making these budget decisions which let’s be honest most of the time falls in the interest of their own associates and political donors.
“Profit-to-member super funds are tightly regulated. They must keep money aside for emergencies and follow strict rules to protect their members”
How well did CBUS do to “protect their members” given they just copped (another) fine of 23M…?
Packer feelings towards Daniel Andrews is no different to financial advisers to the Australian Government. They are out to destroy us and don’t care what happens to these small businesses. Shame on you Australian Government. I just hope your Centrelink bill explodes when more Australians can’t afford advice at all. You’ve already made it impossible for most.
Why don’t they look at getting money from politicians super fiunds as well>
After all, this happened on the governments watch and they failed to control ASIC but they still get paid.
Why doesn’t ASIC pay when it fails?
Well if they dont, based on the blow out and the number of financial adviser left after the ones who don’t meet the qualifications at end of December, each GOOD financial adviser that had nothing to do with the fraud will pay $9,500. Is that fair? Think about yourselves and if you had to do this out of your businesses for someone else in your respective industry/profession committing fraud. How would you feel? I don’t think financial advisers should pay 1c towards this CSLR.
Seems the whole ‘it isn’t my fault’ is catchy – continued disingenuity within more parts of the industry. Either we accept that it is just bad luck for the 12,000 victims and they will just have to suffer or we look for a solution where the cost is spread – unfortunately the very nature of spreading the cost is that innocents will be stumping the bill. But that is the point of spreading the cost is that it becomes a small burden for many, not a wrecking ball for a few.
Super funds benefited with more fum and fees they should 100% pay
Don’t these funds already pass on their Trustee fines to their members?
How is this any different?
Hypocrites.
So other than giving the CSLR bills to the bad actors who directly caused the losses the only other workable solution appears to be that the government pays and not the many innocent financial advisers caught up in this at the moment. Misha makes a good point on behalf of the not for profit super fund members she represents…
I don’t disagree, but is it fair to make advisers pay for something that they had no involvement either?