Federal Treasury has launched a consultation on ways to address a funding shortfall in the Compensation Scheme of Last Resort.

Financial Services Minister Daniel Mulino called for the probe after revised estimates released last month showed the industry-funded scheme will need $75.7 million for the year to June 2026.

About $67.3 million is attributed to the personal advice sub-sector – exceeding the $20 million limit on levies that can be applied to individual sub-sectors.

“This has triggered the option available to me as the responsible minister under the [compensation scheme] legislation to raise a special levy to pay for the excess costs,” Dr Mulino said.

“I have asked Treasury to consult on all statutory options available to deal with this matter. Stakeholder feedback on this matter will also inform ongoing consideration into the [scheme] as part of the ... post-implementation review.” 

The consultation paper says the post-implementation review is ongoing and a first round of submissions took place between January 31 and February 28, seeking stakeholder feedback and comments in response to the review’s terms of reference.

Financial Services Council CEO Blake Briggs has urged Dr Mulino to “prioritise responding to the outcomes of Treasury’s review of the design of the scheme. That review was established to assess the scheme’s framework, scope and sustainability on an ongoing basis.

“If the industry is going to bear the costs of the $47 million special levy, the industry needs assurance that the scheme will not continue to blow out year on year.”

The closing date for submissions is August 29. See details here.