The CSLR today announced it has revised the 2026/27 levy estimate from the initial estimate of $137.5 million to $198.1 million, with $190.3 million related to the financial advice sector. This means that a special levy of $170.3 million will be required.
The CSLR operator announced on 17 November 2025 that the initial estimate for the financial advice sector for 2026/27 was $126.9m, however this number did not include any allowance for Shield and First Guardian. At that stage they felt it was too early to estimate what it could cost, however they now have a better sense of what might be processed in the 2026/27 year.
We know from the AFCA monthly Datacube that Shield and First Guardian financial advice complaints have been landing with AFCA in large numbers. As at the end of May 2026, the number of complaints for the financial advice firms who provided advice on Shield and First Guardian is now well over 2400:
Licensee | Status | No. of Complaints |
|---|
Interprac Financial Planning | Still Operating | 1,322 |
Financial Services Group Australia | In Liquidation | 444 |
United Global Capital | In Liquidation | 359 |
MWL Financial Services | In Liquidation | 252 |
Next Generation Advice | In Liquidation | 72 |
Total | In Liquidation | 2,449 |
AFCA have paused processing the complaints against Interprac as a result of the legal action that Interprac has taken against AFCA. And in any case, whilst Interprac is still operating, it is not possible to lock in their complaints as a cost of the CSLR. Although, with complaints on this scale, it is difficult to see how this outcome would be possible to avoid.
With thousands more Shield and First Guardian clients still likely to submit complaints in the coming months, the exposure is only going to grow. This could mean that the next few years will involve a total CSLR cost for the financial advice sector in the hundreds of millions of dollars.
What can the financial advice profession afford
The CSLR is designed with a number of important caps. Firstly, there is a sector cap of $20m, above which any special levy requires the approval of the Minister. Then there is an overall annual cap of $250m. In the case of the 2026/27 levy, the financial advice profession has already paid the base levy of $20m. What we have in front of us is the prospect of another special levy.
The Government’s recent consultation paper on the CSLR proposed a “waterfall” model for special levies, where the primary sector (in this case financial advice) would pay the first $20m of a special levy (taking the total exposure to $40m). Next, any sector that the Minister considered to be “connected”, meaning that they had contributed to the failures that had ended up with the CSLR, could be expected to pay up to $40m each. Then finally, all remaining retail facing sectors, who are members of AFCA could pay up to $30m each.
Shield and First Guardian are examples of financial product collapses where the failings cover the full extent of the financial services value chain. ASIC has taken action against research houses, Responsible Entities, superannuation funds, financial advisers and lead generators. They have said publicly that they are also considering action against the auditors. Of these sectors, in addition to financial advice, it is only Responsible Entities and super funds that are members of AFCA and could be captured in the CSLR special levy.
The FAAA has argued that $20m is already a lot of money for a predominantly small business sector to pay, and that we should not need to pay any more. That will be a decision for the Minister, however we have strongly argued that given the contribution of other sectors to these losses, that it is entirely unreasonable for financial advice to have to pay the first $40m.
Fixing the CSLR
Since the commencement of the CSLR in April 2024, the system has been under serious challenge, with a broad spectrum of weaknesses revealed. It is broadly accepted that major reform is needed to ensure that the CSLR can become sustainable. The FAAA made the following six recommendations to the Government as part of the recent consultation:
- Vigorous pursuit of wrong doers. The Government should fund an entity aligned to the CSLR that vigorously pursues all parties who have contributed to the failure of a financial firm that has resulted in unpaid AFCA determinations.
- Compensate on the basis of capital loss only. The Government should legislate to limit CSLR payments to capital loss only.
- Limit CSLR exposure for small businesses. The financial advice profession should pay no more than the base levy of $20m, on the grounds that the sector is composed of predominantly small businesses and do not have the capacity to fund larger levies.
- Modify the waterfall approach and limit the financial advice exposure to $20m. The waterfall approach that applies the first $40m of CSLR levies to financial advisers is unfair and unaffordable for a small business sector. This needs to be modified to better share the cost of the scheme and to sensibly limit the exposure of innocent financial advice businesses.
- Fundamental changes to better capture MISs. MIS failures have been a huge contributor to client losses that result in CSLR payments, yet they are protected from the CSLR and have made little contribution to funding via special levies to date. This needs to be addressed.
- Enable the recovery of losses from corporate groups. The Government should introduce changes to allow for recovery from related entities, particularly where assets have been transferred for less than market value or where they have gained benefits from the misconduct that gave rise to the consumer losses, including where they have avoided liability through corporate restructuring.
The Government now needs to respond to the consultation and make a decision on what to do with the $170.3m special levy for 2026/27. These are critical decisions that have significant consequences for the financial advice profession and ensuring the sustainability of the scheme. These decisions will need to be made over coming months.
