The Finance Brokers Association of Australia (FBAA) is warning the federal government against imposing higher levies on unrelated sectors to cover shortfalls in the national Compensation Scheme of Last Resort (CSLR).

In a submission to Commonwealth Treasury, the FBAA stated brokers shouldn’t be forced to bear the brunt of financial advice failures which they had no part in.

FBAA managing director Peter White AM said repeated warnings to government about the scheme’s funding model had gone unheeded, with brokers now potentially facing higher levies.

“When the CSLR was first proposed, the FBAA warned it wasn’t appropriate to take funds from unrelated sectors to cross-subsidise failings in another sector,” he said.

“We were also concerned the model prioritised payments of fees to the scheme administrators and external dispute resolution scheme ahead of anyone else”.

“Why should brokers be forced to pay towards AFCA fees and higher scheme administration costs for shortcomings in another sector?

“The forecast increase in payments relates to failings in the financial advice sector, not the broking sector, and I don’t want to see our industry unfairly penalised.”

Assistant treasurer Dan Mulino was notified in July that estimated claims costs relating to personal advice in 2025-26 under the CSLR were $67.3 million, exceeding the $20 million limit on levies that can be applied to the advice sub-sector to fund the claims.

Mr Mulino subsequently issued a public consultation paper seeking stakeholder feedback and is considering options under the CSLR legislation to raise a special levy to pay for the excess costs.

FBAA regulatory compliance specialist David Carson said the financial burden of unpaid determinations should not go beyond relevant stakeholders, one being the government. 

Mr Carson recommended government must make a financial contribution, saying it already collects too much money from industry through fees and levies.

“Government can’t continue to look at industry as a bottomless supply of money,” Mr Carson said.

“We recognise there are consumers who are affected by the actions of bad actors, and we support measures designed to assist them”.

“However, this scheme is barely 12 months old and we already have a problem. We don’t want to see honest, hardworking businesses deprived of vital income, especially when the failures in this scheme substantially lie at the feet of government and regulators.”