The financial advice profession provided a sharp response this week to the Treasury consultation on a special levy to cover the funding shortfall for the Compensation Scheme of Last Resort (CSLR), which is currently primarily driven by claims from the collapse of Dixon Advisory. The proposal, which could see advisers footing a bill far exceeding the scheme's annual cap, was met with forceful opposition from professional bodies. The development comes as ASIC continues its relentless enforcement campaign against misconduct, issuing multiple bans related to other failed schemes. In a further blow to industry accountability, the much-anticipated Senate inquiry into the collapse of Dixon Advisory has been quietly scrapped, a move critics say is a missed opportunity to learn from systemic failures.
Advisers, Advice Practices and Clients
Following the close of submissions to the Treasury consultation last week regarding the excess Compensation Scheme of Last Resort (CSLR) funding, debate has erupted across all sectors of the broader industry over who is to blame and therefore who should bear the costs. The large number of claims resulting from the Dixon Advice fiasco means the current $20 million cap for the advice sector is no longer adequate, leading the government to contemplate imposing a "special levy" to address the shortfall.
The Financial Advice Association Australia (FAAA) has responded sharply, arguing that the special levy doesn't fix "fundamental flaws" in the CSLR's funding model. The association is urging the government to cap the total levy for advice at $20 million and to pursue the directors of failed firms more aggressively for unpaid determinations. The FAAA has warned that advisers are already facing potential 15% increases in their levies, and any additional impost could be unsustainable for many small businesses. Some commentators have even called for consumers to contribute to the levy, highlighting the growing frustration within the profession.
Adding to this frustration is the news that the Senate inquiry into the collapse of Dixon Advisory and other wealth management failures has been officially scrapped. Industry groups have labelled the decision a "major missed opportunity" to investigate the systemic issues that lead to such catastrophic collapses, leaving victims and the broader industry without answers.
Amid these pressures, the profession continues to experience significant disruption from adviser movement as the industry seeks a new equilibrium. In positive news for the future of advice delivery, a partnership between Bravura and Future Group aims to develop new digital advice solutions.
The Regulatory Environment
ASIC's enforcement agenda has remained in high gear, with a continued focus on holding individuals accountable for advice failures. The regulator permanently banned convicted investment manager Brett Trevillian from providing financial services. In a separate action, ASIC also banned former United Global Capital (UGC) adviser Milutin Petrovic for six years for failures related to advice that saw clients invest their retirement savings into high-risk products connected to the licensee. These actions follow ASIC's ongoing investigations into the collapse of both UGC and the Shield Master Fund.
The regulator has also expanded its allegations against Ferras Merhi, a key figure in the Shield and First Guardian collapses, seeking leave from the Federal Court to allege unconscionable conduct and conflicted advice. In other enforcement news, the directors of Open4Sale Global were fined $2.8 million for fundraising breaches, and AUSTRAC issued a $187,800 infringement notice to a reporting entity for late reporting.
On a more forward-looking note, Treasurer Jim Chalmers officially opened the "Investor Front Door" pilot program. The program is designed to act as a concierge service, helping investors with nationally significant projects navigate regulatory approvals and connect with government financing opportunities.
The Economy, Investments & Platforms
As the August earnings season concluded, analysis shows it sparked record volatility, though small caps managed to outperform larger companies. In a significant corporate development, Macquarie Group has announced a major restructure to separate its banking and trading operations, a move that comes amid heightened regulatory scrutiny.
Product innovation continues to be a key theme in the investment space. BetaShares has launched its first private credit fund, opening up a new avenue for advisers seeking alternative income sources for client portfolios. In the platform world, AMP's North has released a streamlined and simplified investment menu, a move aimed at tackling the "advice gap" by making it easier for advisers to construct portfolios.
There have been several key leadership changes, with TCorp's chief executive announcing his retirement and the chief of Clime Investments resigning. Meanwhile, funds manager Platinum is facing further challenges, with another major client pulling $580 million from its funds.
The Superannuation & Retirement Landscape
A significant legal battle is brewing between some of Australia's largest superannuation funds and the Australian Taxation Office (ATO). Industry giants Hesta and Australian Retirement Trust are reportedly taking the ATO to court to challenge the denial of franking credit refunds, a case that could have broad implications for investment returns and tax management across the sector.
The focus on improving retirement outcomes continues to intensify, with a growing consensus that retirement advice needs to move beyond a narrow focus on the superannuation balance and adopt a more holistic approach. Structuring portfolios to align with specific income needs in retirement is becoming a central theme for advisers and product providers.
Meanwhile, UniSuper has flagged concerns about the risks posed by US presidential intervention in global share markets, warning of potential volatility for members' portfolios. On the investment strategy front, Hesta is urging ASX 300 boards to adopt a stronger corporate focus on sustainability and climate risk, outlining its key engagement priorities.
Life Insurance & Client Protection
The life insurance sector has seen a dramatic turnaround in profitability, with APRA data showing that life insurers doubled their earnings in the 2025 financial year. This improved financial health comes as the industry pushes for reforms to make risk advice more accessible. Key industry figures are calling on the government to "release the handbrakes" on risk advice, arguing that current regulatory settings are overly restrictive.
In product news, NobleOak is set to launch a new advised life insurance product, signalling confidence in the adviser channel. ClearView has also reported positive results after repricing its legacy products. However, the Council of Australian Life Insurers (CALI) has flagged potential flow-on effects from the overhaul of NSW's workers' compensation scheme, which could impact the broader insurance market. There is also growing adviser interest in outsourcing claims management, with a recent poll showing a surge in support for using third-party specialists to handle the claims process.
In the Background: Key Adviser & Licensee Movements
Several key appointments and departures have taken place. As noted, the chief executives of both TCorp and Clime Investments have stepped down. In the advice technology space, Praemium has partnered with a global investment firm to offer more international options on its platform. Integro Private Wealth announced its expansion plans last week, while Centrepoint Alliance continues its focus on growth.
Key Takeaways for Your Practice
Prepare for a CSLR Special Levy: The Treasury consultation is a critical development. Engage with your industry association, understand the potential financial impact on your business, and prepare for a likely increase in your CSLR costs. The current funding model appears unsustainable, and the burden will fall on the profession.
ASIC's Enforcement Agenda Remains Unchanged: The relentless pace of banning orders, particularly for advice related to property in SMSFs and high-risk products, is a clear warning. This is an opportune moment to review your compliance frameworks and ensure your advice processes are beyond reproach.
Scrutinise Franking Credit Strategies: The legal challenge mounted by major super funds against the ATO over franking credits is a significant development. Monitor this case closely, as its outcome could impact the tax effectiveness of certain investment strategies for superannuation and pension clients.
Embrace Holistic Retirement Planning: The industry's shift from a singular focus on accumulation to a broader view of retirement income is accelerating. This presents a clear opportunity to deepen client relationships by providing strategic advice on decumulation, income layering, and non-superannuation assets.
Article by:
Comments0