The Albanese Government is directing the Treasury to undertake a comprehensive review of the Compensation Scheme of Last Resort (CSLR) to ensure victims of financial misconduct have a sustainable avenue for redress.
This is all about ensuring the scheme remains sustainable into the future for consumers and for the industry.
Taking care of consumers is the focus of the scheme, it's the focus of the Albanese Government and it will be the focus of this review.
At the same time, Australians need access to affordable high quality financial advice.
The advice industry was abandoned and decimated by the former Coalition government as the number of advisers has fallen from 28,000 in January 2019 to less than 16,000 today. This raised costs on advisers and the cost of advice for Australians.
The government has taken action to rebuild the financial advice industry. In our first 12 months, we introduced legislation to establish a pathway for experienced advisers to continue providing financial advice, which has retained over 4,000 advisers that could otherwise have exited the industry.
We are also undertaking the most significant reform to the financial advice laws in over a decade through our Delivering Better Financial Outcomes package which will cut red tape, reform statements of advice and help advisers use their professional judgment to better support clients.
As recommended by the Ramsay Review, the CSLR is fully funded by industry.
New data from the operator of the CSLR shows that industry will have to provide $78 million to compensate victims in 2025-26, largely as a result of the liquidation of financial advisory firm United Global Capital Pty Ltd.
Ensuring the scheme is sustainably funded will be an important focus of the review.
The government legislated the CSLR in 2023, after the former government failed to take action despite the scheme being a recommendation of the 2017 Ramsay Review and the Banking Royal Commission.
The CSLR ensures victims can access some compensation in circumstances of genuine last resort where misconduct has occurred in the provision of personal financial advice, credit intermediation, securities dealing and credit provision.
While industry has provided broad support for the CSLR, it's important that there is confidence that the scheme is meeting its objective in a way that is sustainable for both companies and consumers.
Whether it's our reforms to get a fair go for families and farmers at the checkout or our big and broad competition agenda to ease the cost of living for Australians, taking care of consumers is one of the Albanese Government's highest priorities.
We'll continue to do everything we can to safeguard consumers and ensure all Australians have access to affordable and quality financial advice.
