CPA Australia has called on the Treasury to reconsider proposed changes that would shift more of the Compensation Scheme of Last Resort (CSLR) funding burden onto self-managed superannuation funds (SMSFs).
In a joint submission with Chartered Accountants Australia and New Zealand (CAANZ) and the Institute of Public Accountants (IPA), CPA Australia warned the move would unfairly penalise investors while doing little to tackle the root causes of major losses.
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CPA Australia Superannuation lead Richard Webb explained that carving out specific categories of retail investors for reduced statutory rights is not a sustainable solution to the scheme’s escalating costs.
Webb said: “Singling out specific groups of retail investors for the loss of statutory protections won’t fix the unsustainably expensive CSLR levy.
“It simply shifts costs onto investors while ignoring the upstream drivers of loss – including product failures and misconduct prior to advice and distribution.”
The submission comes as CSLR levy costs are projected to surge from A$4.8m ($3.36m) in 2024 to A$75.7m in 2026. The figure could reach A$127m by 2027, well above the A$20m subsector cap.
Webb noted that the scheme must function as a genuine last resort, backed by effective controls across the financial system.
He added: “For the CSLR to deliver the greatest benefit, it must truly be a scheme of last resort, and that means the upstream links in the chain must work properly.
“A sustainable model requires all sectors responsible for those losses – particularly managed investment schemes – to contribute fairly.”
Webb warned that shifting costs to SMSFs via poorly designed proposals could undermine system trust.
“The current CSLR regime already shows the unfair and disproportionate cost burden imposed on currently registered financial advisors and extending this to SMSFs simply compounds the problem,” Webb added.
CPA Australia advocates for a “holistic approach to CSLR funding” that includes product and service providers. This approach drives industry-wide accountability and protects investors fairly, the accounting body said.
Last month, CPA Australia warned that a proposed 30% minimum tax on trust distributions could significantly impact small businesses and households.
