This week, the profession erupted in unified opposition to a potential $67.3 million special levy for the Compensation Scheme of Last Resort (CSLR), a figure driven almost entirely by the collapse of managed investment schemes, such as Shield Master Fund and First Guardian. As submissions to the Treasury’s consultation closed, adviser associations warned that forcing the current profession to foot a bill of this magnitude is not only unfair but also unsustainable. This unfolding crisis creates a stark contrast with a parallel push from regulators, who this week admitted their own struggles with complexity and pledged a renewed focus on simplification and cutting red tape. For advisers, it’s a week of frustrating paradoxes, caught between paying for the sins of the past and hoping for a simpler future.
Advisers, Advice Practices and Clients
The battle over the Compensation Scheme of Last Resort (CSLR) funding shortfall has reached a fever pitch, with adviser bodies formally rejecting Treasury's proposal for a special levy to cover the blowout. The Financial Advice Association Australia (FAAA) informed Treasury that advisers cannot and should not be expected to bear a $67.3 million bill, arguing instead that the costs should be spread across other sectors that also contributed to the problem. The FAAA, along with accounting bodies, has called for Managed Investment Scheme operators to face tougher compensation requirements to prevent a recurrence.
The Stockbrokers and Investment Advisers Association (SIAA) echoed these concerns, warning that crippling levies are choking the pipeline of new advisers and making the profession unviable. Industry groups are also advocating for the removal of the 'but for' test in CSLR claims, arguing that it is a key driver of the cost explosion. The CSLR's own chief executive has even suggested that the compensation cap might need to be reduced for major failures to ensure the scheme's viability.
The crisis has its roots in the collapse of the Shield Master Fund and First Guardian, and the fallout continues to spread. Licensee group Interprac is now actively pursuing trustee remediation for clients caught in the collapses, while Sequoia has suggested that super fund operational risk reserves could provide a recovery pathway for victims. These moves come amid new revelations that investors in the failed funds allegedly received fraudulent Statements of Advice, highlighting the depth of misconduct that current advisers are now being asked to pay for. There are growing concerns within the profession that not enough was done to heed early warning signs about the failed schemes.
Against this backdrop of financial pressure, the profession’s numbers have taken a slight hit. After eight consecutive weeks of growth, adviser numbers dipped slightly last week. While the latest adviser exam saw a welcome lift in the pass rate to 69%, a significant challenge remains, with analysis suggesting thousands of experienced practitioners are yet to meet the final qualification standards. Meanwhile, the industry continues to fend off threats from unlicensed operators, with the Property Investors Council of Australia (PICA) warning that property spruikers are increasingly encroaching on territory that should be the domain of licensed financial advisers.
The Regulatory Environment
In a moment of candid reflection, ASIC Chair Joe Longo admitted this week that "we don't do simplification well," signalling a major overhaul of the regulator’s guidance to make it more accessible and principles-based. This acknowledgment was backed by action, with ASIC announcing it is actively culling unnecessary red tape and has published correspondence with Treasury outlining further opportunities for regulatory reform. The Treasurer also flagged a broader push to reduce the burden on businesses. This comes as key reforms to modernise Australia’s payments system officially passed the Senate.
However, the regulator's focus on enforcement has not diminished. The week was punctuated by several significant events, including the conviction of Perth man Chris Marco for a $34 million fraud. In another long-running case, Mayfair 101 director James Mawhinney was hit with a further 15-year injunction from the Federal Court. In a major gatekeeper failure, Societe Generale Securities Australia was fined $3.88 million.
The regulatory battle over digital assets also took a critical turn, with the High Court granting ASIC special leave to appeal the Full Federal Court's decision in its case against crypto provider Block Earner.
Meanwhile, a political storm is brewing over the government’s handling of a major review into Managed Investment Schemes. Shadow Financial Services Minister Pat Conaghan has accused the government of deliberately "burying" the report, which was delivered to it 18 months ago, and is demanding answers on why its findings have not been released. This is particularly pointed given the CSLR crisis is a direct result of MIS collapses.
The Economy, Investments & Platforms
The economic outlook became more complex this week after new data showed the Australian economy grew faster than expected in the June quarter, primarily driven by household and government spending. While the news signals a resilient economy, it may also mean the Reserve Bank of Australia has a tougher path ahead and could delay any potential interest rate cuts. In a speech this week, RBA Governor Michele Bullock noted the central bank is alert to the impact of new technology on the economy.
In market news, funds manager Platinum posted another month of significant outflows, losing a further $580 million in August. This comes as analysis from Morningstar suggests the proposed merger between Platinum and L1 Capital could be a "lifeline" for the under-pressure manager. In better news for active management, new data shows a slight improvement in the number of Australian global equity managers beating their benchmarks.
There was significant movement in the technology and platform space. Andrew Price confirmed his exit as chief executive of Iress, a key technology partner for many advice firms, after just 18 months in the role. Elsewhere, Praemium announced a move to expand global fund access for its users and the trend towards exchange-traded funds continues, with BlackRock's iShares suite of ETFs soaring past US$5 trillion in assets under management. Ausbil became the latest manager to enter the space, launching its first active ETF.
On the institutional front, Australia’s sovereign wealth fund, the Future Fund, reported a strong 12.2% return for the 2025 financial year, with chair Peter Costello hailing a $27 billion gain as its portfolio shifts paid off.
The Superannuation & Retirement Landscape
The CEO of AustralianSuper, Paul Schroder, issued a stark warning this week, telling a national forum that Australia faces a "retirement tsunami" and needs an urgent system reset to cope. In a move to support this segment, Aware Super launched new features for advisers on its platform. The call for reform comes as the superannuation sector continues to grapple with the fallout from the collapse of the Shield and First Guardian. Superannuation trustee Equity Trustees has come out swinging, publicly defying ASIC's allegations regarding its oversight of the failed Shield Master Fund. Elsewhere, ASFA has labelled Treasury's proposed approach to sustainable product labelling as "perverse".
Cybersecurity remains a top priority, with super funds recently participating in an industry-wide drill to test their resilience against attacks. APRA continues to press funds to bolster their cyber preparedness. In its latest quarterly statistics, APRA reported that total superannuation assets reached $4.1 trillion as of the end of June 2025.
The controversial Division 296 tax on balances exceeding $3 million remains a significant political issue. There were reports this week that pushback from APRA-regulated funds may be prompting the Labour government to reconsider its position. In a separate move, Coalition Senator Jane Hume introduced a bill aimed at addressing the gender gap in superannuation by allowing couples to split their superannuation balances tax-free before reaching preservation age, which could also help mitigate the impact of the new tax.
Life Insurance & Client Protection
It was a productive week for the life insurance sector, with a strong focus on enhancing industry practices and attracting more women to the profession. The Council of Australian Life Insurers (CALI) has reopened its grant program designed to support and encourage female financial advisers specialising in risk advice. The initiative aims to enhance the diversity of the advisory pool and better meet the needs of female clients.
In a move to improve claims handling, the Australian Financial Complaints Authority (AFCA) has launched a joint consultation on its approaches to life insurance complaints. Elsewhere, claims manager Gallagher Bassett highlighted how it is using artificial intelligence to transform the claims handling process.
In product and marketing news, the newly merged life insurer Acenda has launched its first nationwide brand campaign, "Take Life On," capping off a transformative period for the company. Insurer AIA has also launched a new campaign hitting screens this week.
In the Background: Key Adviser & Licensee Movements
The most significant executive news this week was the departure of Andrew Price as CEO of Iress, with the board now searching for a successor. Lazard Asset Management also announced its new chief executive, appointing Christopher Hogbin. UniSuper has hired a new manager for investment solutions from Lonsec, while Cbus has appointed a new head of risk transformation.
Key Takeaways for Your Practice
Prepare for a CSLR Levy and Advocate for Change: The proposed special levy is a direct threat to the financial viability of many advice practices. It is crucial to understand the potential impact on your business cash flow. Engage directly with your professional association to support the campaign for a more equitable and sustainable funding model.
The Buck is Being Passed, Review Your Due Diligence: The push to hold superannuation trustees and platform operators partly liable for remediation in the Shield/First Guardian collapse is a significant development. This widens the net of responsibility and should prompt a review of your own due diligence processes for all product and platform recommendations.
Regulatory Simplification is on the Agenda: ASIC Chair Joe Longo's admission that the regulator has struggled with simplification is a positive sign. Monitor the regulator's review of its guidance documents closely, as this could lead to meaningful, practical changes that reduce compliance complexity.
The Economic Outlook is Murky: Stronger-than-expected economic growth has clouded the outlook for interest rate cuts. This is a critical time to manage client expectations around portfolio returns and the performance of defensive assets. Ensure your communication strategy addresses this uncertainty.
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