The Strategic Context
The Compensation Scheme of Last Resort (CSLR) has become a flashpoint for industry frustration. In 2025, the estimated levy skyrocketed to $137.5 million.
While mortgage brokers are currently "safe" within their cap, the structural flaw of the "Special Levy" mechanism means you could effectively be forced to subsidize the failures of financial planners.
Total Levy Estimate
For FY2025
Advice Sector Liability
Breached $20M Cap
The Disparity
Visualizing the funding shock. While brokers (Credit Intermediaries) contribute a fraction, the Financial Advice sector threatens to destabilize the entire fund.
Critical Insight
The Advice sector has exceeded its legislative cap by over 600%.
Broker Position
Brokers are currently paying ~$2.2M, well under the $20M safety cap.
The "Waterfall" Mechanism
How does a debt in one sector become a bill for another? Explore the mechanism below.
Step 1: The Sector Cap
Each industry subsector (Brokers, Advisers, Securities Dealers) has a legislative liability cap of $20 Million per year.
The "Black Swan" Risk
MFAA CEO Anja Pannek calls the scheme "unsustainable." But the estimates don't tell the whole story. Insolvencies like Shield Master Fund and First Guardian represent unquantified risks.
- Brokers within $20M Cap.
- Advice Levy at $126.9M.
- Govt absorbing legacy costs.
- ⚠Cost Explosion (Hundreds of Millions).
- ⚠Cross-Subsidization Triggered.
- ⚠Direct Hit to Broker P&L.
What Brokers Must Do Now
Update FY26 P&L
Don't assume the $2.2M cap is permanent. Build a buffer for the Special Levy.
Back the MFAA
Support lobbying efforts to ring-fence broking from advice failures.
Watch Insolvencies
Keep an eye on Shield Master and First Guardian news via The Broker Times.