iscover 
The Assistant Treasurer and Financial Services Minister Daniel Mulino MP on Wednesday (10 December) announced that a $47.3 million special levy will be applied across the finance sector in 2026.
The measure is to meet the rising financial demands in the Compensation Scheme of Last Resort (CSLR) for the 2026 financial year, largely caused by the collapse of a number of financial advice companies.
Mulino said that the levy was “applied broadly to reduce the burden on any one subsector and to ensure the sustainability of individual subsectors and the CSLR as a whole.”
Treasury modelling indicates that the 1.4 per cent contribution equates to around $667,529 across the sector or $7 per credit representative.
This was calculated according to each subsector’s share of the Australian Securities and Investments Commission’s 2023–24 supervisory costs.
By comparison, financial advisers are expected to contribute around 22 per cent, consistent with the origin of the misconduct and compensation claims. Other notable contributions come from credit providers (over 15 per cent or around $6.8 million), responsible entities (about 13.7 per cent or $6.2 million), and super trustees (12.9 per cent or $5.9 million).
Although Treasury modelling indicates that mortgage and finance brokers will pay a 1.4 per cent contribution to the special levy, the managing director of the Finance Brokers Association of Australia (FBAA),Peter White AM, said the industry should “back on the precedent.”
“It would appear that the amount will be small, but we shouldn’t get hit with the increase, regardless of the amount. That’s unfair and unreasonable.
“This needs to be dealt with within the sector that caused it,” White said.
Launched in 2024, the CSLR was set up to help consumers who have made a successful financial misconduct claim to the Australian Financial Complaints Authority (AFCA), but have not been paid by the financial firm involved due to insolvency.
The independent and not-for-profit body is authorised by the Australian government and can facilitate payments of up to $150,000 in compensation.
Funded by industry, the CSLR is limited to $20 million per individual subsector, but Mulino was notified in July that estimated claim costs for 2025–26 had ballooned to $67.3 million, well above the amount one subsector should pay.
As these costs largely relate to the collapse of a number of financial advice companies – including Dixon Advisory and UGC – broker associations have noted that their members are footing the added bill for issues they did not cause.
Mortgage and Finance Association of Australia (MFAA) CEO Anja Pannek said that while the MFAA recognised the difficult decisions facing the government, the outcome was disappointing for the broking industry and thousands of small broking businesses.
“This is an additional cost burden for our members and the industry,” Pannek said.
“We remain firm in our position: mortgage and finance brokers, who have one of the lowest levels of misconduct across the financial system, should not be required to cross-subsidise compensation for failures occurring entirely outside the credit intermediaries sub-sector in perpetuity.”
Although the exposure in the special levy for the mortgage industry was low, the FBAA’s White said that the contributions could grow to become more significant over time.
The initial estimate for the fourth levy period (FY27) for the CSLR is set to be the largest to date. A total levy of $137.5 million will be needed for the upcoming financial year to cover an expected 912 claims, but this may rise further.
Pannek said: “The sheer magnitude of the levy, not only in FY26, but also what has been flagged for FY27, highlights how critical it is that steps be taken to address the root cause of misconduct.”
White added: “If we roll over and say it’s only a few dollars now, next time it could be much higher.
“Wherever there’s a fracture in that system, that is where the penalty should lie. If there are any blow-outs, you shouldn’t pass that back to our sector.”
Welcome reforms
Following a roundtable on Wednesday (10 December), the MFAA welcomed Mulino’s commitment to a substantial CSLR review, with discussion papers to be released in early 2026 covering:
• Structural reform of the scheme.
• Options to improve recovery and allocation rules.
• Measures to reduce the likelihood and impact of large collapses, including reforms to lead generation, managed investment schemes, oversight, platform accountability, and professional indemnity insurance.
Pannek said the MFAA will engage constructively in this process.
She said: “We continue to support a fair, sustainable and well-targeted framework. The coming review is an important opportunity to address structural drivers of misconduct, improve recoveries from wrongdoers, and ensure the CSLR remains true to its purpose as a genuine ‘last resort’ scheme.”
Pannek emphasised that mortgage and finance brokers already operate in one of the most strongly regulated parts of the financial system, with negligible evidence of consumer harm.
“Any future approach on the CSLR must recognise the positive outcomes delivered by mortgage and finance brokers,” Pannek said.
[Related: Brokers’ CSLR levy rises amid massive industry-wide jump]