The Scheme’s Own Actuary Expects 10 Claims Against Credit Intermediaries. Treasury’s Draft Has the Sub-Sector Paying $9.9m

Treasury opened a two-week consultation on 21 September that will help decide how much of a $170.3 million shortfall the broker channel funds. The shortfall was not generated by brokers. On the scheme’s own numbers, the credit intermediary sub-sector expects ten claims this financial year — and is proposed to contribute about $9.9 million. Submissions close on 5 October.

Two numbers, two weeks

Most levy stories are worth a skim. This one has a deadline attached, and it falls at the end of next week.

On 21 September 2026, Treasury opened consultation reference c2026‑805258, “Compensation Scheme of Last Resort 2026–27 special levy”. Submissions close on 5 October 2026. It is the first time the government’s new waterfall framework will actually be applied, and the question it answers is who funds a $170.3 million hole.

The hole is not the broker channel’s. The CSLR’s revised estimate for FY2027 — the fourth levy period — was published by the scheme operator in June 2026 and puts total estimated claims, fees and costs at $198.1 million. Of that, $190.3 million sits with the personal financial advice sub-sector, driven by the final cohort of claims relating to Dixon Advisory & Superannuation Services and by the Shield and First Guardian Master Fund product failures. Because a sub-sector’s annual levy is capped at $20 million, the estimate concludes that the scheme “would need to seek a Special Levy to address the remaining $170.3m required to meet the Revised Estimate in respect of the Personal Financial Advice sub-sector”.

Now the second number, from the same document. Credit intermediation — the sub-sector that captures mortgage and finance brokers — is allocated $2.1 million for FY2027. Most of that is not compensation at all. The actuary expects ten claims to be paid against credit intermediary firms across the entire financial year, on roughly $1.0 million of gross claim payments. The balance is CSLR operating costs of about $1.3 million, ASIC costs of $225,000 and AFCA fees of $185,000.

Against that, Treasury’s draft allocation would have the sub-sector pay a $7.79 million special levy, lifting its total 2026–27 CSLR contribution to about $9.9 million once the roughly $2.2 million annual levy is added. That figure and the tier-level breakdown below come from The Adviser‘s reading of the consultation paper published on 25 September; Treasury’s own public release does not itemise the sub-sector allocations.

What Treasury actually released

The consultation is narrow and short. Treasury is seeking views on how the waterfall framework should be applied to the 2026–27 special levy, and specifically on the operation of the first and second tiers and related levy allocation issues. The consultation paper is available on the Treasury consultation hub, submissions go through the site, and the contact address is CSLR@treasury.gov.au.

The framework itself came out of the Assistant Treasurer’s August 2026 CSLR reform package. Treasury’s release describes it as seeking to allocate levy costs to the financial services sub-sectors most closely connected to the losses, while preventing any single sector from carrying an unsustainable burden. Financial Standard reported the Assistant Treasurer, Dr Daniel Mulino, describing the framework in those terms.

Two things follow from that framing, and brokers should hold both at once. The first is that “most closely connected to the losses” is doing a lot of work when the sub-sector in question expects ten claims. The second is that this is a draft. Treasury is consulting precisely because the allocation is not settled.

How the waterfall works

In plain terms, the waterfall fills from the top. The sub-sector that generated the losses pays first, up to its cap. Sub-sectors judged connected to those losses pay next. Retail-facing sub-sectors sit at the bottom as a backstop.

Applied to the $170.26 million that has to be found for 2026–27, the draft breaks down as follows, per The Adviser‘s reporting of the consultation paper.

Brokers sit in tier three. That is the structural point worth understanding: the channel is not being asked to pay because of anything it did, but because it is a retail-facing sub-sector with a licence, a levy metric and the capacity to be invoiced.

What the scheme expects brokers to cost it

It is worth being precise about the $2.1 million, because it is easy to misread as “brokers cost the scheme $2.1 million in compensation”. They do not. On the actuary’s numbers, gross claim payments against credit intermediary firms are about $1.0 million across ten claims. The rest of the $2.1 million is the sub-sector’s share of running the scheme — CSLR operating costs, ASIC’s costs and AFCA fees.

For context on the trend, the sub-sector’s allocation has been broadly flat: $0.8 million in FY24, $1.8 million in FY25, $1.833 million in the FY26 revised estimate, and $2.1 million now. The advice sub-sector over the same window went from $2.4 million to $190.3 million.

The step-up on last year’s invoice

The best guide to what a draft allocation feels like in practice is what ASIC actually invoiced last time. For the 2025–26 special levy, ASIC’s published figures show the credit intermediaries sub-sector was charged $667,529.41 in total, across 4,137 entities, calculated at $5.72 per credit representative using 2023–24 industry funding business activity metrics.

Set the proposed $7.79 million against that $667,529.41 and the special levy line grows by roughly 11.7 times. Set the proposed $9.9 million total contribution against the roughly $2.2 million annual levy and the increase is about 4.5 times. Greg Ashe, director of compliance and regulatory consultancy QED Group, put it to The Adviser this way:

“Levies are going to be almost five times what they otherwise would have been charged.”Greg Ashe, Director, QED Group, quoted in The Adviser, 25 September 2026

Ashe also told the publication the draft would mean “an extra fee of $165 for each corporate and natural persons in this year”, and that “costs should remain in the silos in which they are borne”.

What this is, and what it is not

It is not a finding about broker conduct, and nothing in the consultation suggests otherwise. The waterfall allocates on connection to losses and on the capacity of retail-facing sub-sectors to absorb a shortfall. On the scheme’s own estimate the sub-sector expects ten claims.

It is also not yet a bill. Treasury is consulting; the special levy is then set by ministerial determination. ASIC, not Treasury, does the invoicing afterwards, and it calculates the amounts in accordance with the Financial Services Compensation Scheme of Last Resort Levy Regulations 2023. ASIC has said it aims to issue levy notices within 30 days after the relevant parliamentary disallowance period of 15 sitting days expires, with payment due 30 business days after a notice is issued. In practice that means a determination made now is a cash-flow event some months later — but one you can see coming.

One operational point that catches people out: the levy attaches to the credit licence. If you operate as a credit representative under someone else’s Australian credit licence, the invoice goes to the licensee, and whether it is passed on to you depends on your agreement with them, not on the levy rules. That is a conversation worth having before the determination lands, not after.

The argument the channel has already put

The associations have been making a consistent case for more than a year, and the draft gives them a concrete number to aim at. In May 2026, the MFAA argued for levy arrangements proportionate to each sector’s misconduct record and claims history. Its chief executive, Anja Pannek, was quoted by Mortgage Professional Australia saying:

“Sectors with strong consumer outcomes, low levels of misconduct and minimal compensation claims should not be required to shoulder an unreasonable share of the scheme’s costs.”Anja Pannek, Chief Executive, MFAA, quoted in Mortgage Professional Australia, 25 May 2026

In the same reporting, the MFAA pointed to broker-related matters accounting for less than one per cent of banking and finance complaints to AFCA. Whether that argument lands is a policy question this masthead will not pretend to settle. What is clear is that the structural case now has a specific draft allocation to be tested against, which is a stronger position than arguing about principles in the abstract.

Before 5 October: a broker checklist

What to watch next

Four things will tell you how this resolves. The first is the final ministerial determination and whether the tier-three allocation moves after consultation. The second is whether the determination is challenged during the disallowance period. The third is the metric ASIC publishes when it invoices — per credit representative again, or something else. The fourth, and the one that matters most for FY2028, is whether the advice sub-sector’s estimate stays at this order of magnitude, because a waterfall that has been used once is considerably easier to use twice.

Sources: CSLR, FY2027 4th Levy Period Revised Estimate (June 2026) for total, sub-sector and claim figures and the $170.3m shortfall quotation; Treasury consultation c2026‑805258, Compensation Scheme of Last Resort 2026–27 special levy, opened 21 September 2026, closing 5 October 2026; ASIC, CSLR special levy guidance, for 2025–26 sub-sector amounts, the $5.72 per credit representative rate, the Levy Regulations 2023 and invoice timing; The Adviser, 25 September 2026, for the draft tier structure and the $7.79m and $9.9m credit intermediary figures, and for the Greg Ashe quotations; Financial Standard, September 2026, for the Assistant Treasurer’s description of the framework; Mortgage Professional Australia, 25 May 2026, for the MFAA position and the Anja Pannek quotation.