Financial Advice Association Australia fears members may pay more to cover the Compensation Scheme of Last Resort’s projected funding shortfall in 2026-27. 

Association CEO Sarah Abood says advisers are “at risk” after Financial Services Minister Daniel Mulino last week announced a $47.3 million special levy to address the program’s 2025-26 deficit.

“The minister has said fairly explicitly that we shouldn’t consider this to be a precedent for next financial year,” Ms Abood told a member webinar.

“That’s the one, to be honest, that concerns me even more … There’s simply no way that we can sustain continuing to pay these costs. And that’s a concern for everyone because that means our sector is at risk, but the consumer compensation is at risk as well.” 

The 2025-26 special levy will be spread across 23 retail-facing financial services subsectors, with retail advisers slugged the biggest portion at 22%, or almost $10.4 million.

The federal government took the extraordinary measure after the CSLR said it needed about $75.69 million in 2025-26 to pay eligible claims, with $67.28 million attributed to the financial advice subsector.

Scheme legislation caps a subsector’s annual levy contribution at $20 million, but there are provisions for a special charge should the need arise. The scheme launched last year to support complainants who have not been paid following Australian Financial Complaints Authority determinations. 

Last month, the scheme operator estimated its revised FY27 levy at $137.5 million, of which $126.9 million is for personal financial advice-related claims. It said the revision will allow it to make a request for a special levy after July 1.

The scheme’s funding needs have blown out after investors lost money following collapses in some investment products.

Ms Abood said: “The point that we’re making is the impact for us is existential. There are firms that might find they just can’t pay … They will leave the sector, individuals will leave the sector.”

Council of Australian Life Insurers CEO Christine Cupitt said: “We support spreading this year’s special levy across the finance sector, but we are disappointed that it still places an unreasonable burden on financial advisers at a time when adviser numbers are at their lowest.”