CSLR Detail You Need To Know

Hi, at our recent Gold Coast Conference AIOFP technical expert Lionel Rodrigues delivered a comprehensive summary of the CSLR to Members about its devastating ramifications on our Profession if left in its current form.

A key element to the presentation was the attendance of AFCA Deputy Ombudsman Shail Singh and CSLR CEO David Berry who were speaking on a panel session later in the day, they did not question Lionel’s presentation content.

The AIOFP does not want to be considered an ‘alarmist’ with this issue but our recent use of the ‘Grim Reaper’ as an analogy is unfortunately justified. We also need to keep the severity of the issue live with the Minister who needs to make a critical decision in the near future.

Late last week ASIC issued the latest CSLR invoice notice to all AFSL Licensees who then must collect the money from its authorised representative Advisers.

The following in blue is an extract from Lionels conference presentation and current thoughts –

‘These levies only reflect the CSLR Levy up to the $20 Million cap. The funding required is for $67.30 Million. Therefore, a further “special levy” may be raised, for the balance of $47.3 Million.

In my presentation to members at the Gold Cost conference, I explained that Minister Mulino has discretion in how he applies/raises a special levy; see s1069H (1) –(6) Corporations Act 2001.  I also explained that the good Minister is not obliged to apply a special levy as there is no legislative prescription for him to do so. Currently, the Minister has called for consultation on a “statutory option” as to how to deal with the current CSLR levy amount.

From the levies most recently issued, each adviser is levied approximately $1295, however this is currently calculated on the sub sector cap of $20 Million. If a special levy were to be raised, then it is possible that the total CSLR will be approximately $4532 per adviser.

I also alert you to the fact that I have confirmed with the CSLR operator that the 2027 CSLR levy is budgeted to be $127 Million. By way of conjecture, this then may result in a levy of $8,466 per adviser assuming 15,000 advisers share the levy. At 8000 advisers, the result could reflect a total CSLR levy of some $15,875 per adviser. I stress however, that these calculations are hypothetical and subject to various regulatory imposts depending on the License conditions.

With investor losses mounting and reported via AFCA, there appears to be substantial increases in future CSLR levies unless the architecture of the CSLR is changed’.

If the SHEILD failure does represent a $1.2 Billion loss and the Adviser numbers reduce to 8,000 post 1/1/26, the liability numbers are frightening with the cost per Adviser at $150,000, it’s a simple maths calculation.

Why would anyone want to become an Adviser and why would anyone want to be an AFSL Licensee doing ASIC’s ‘dirty work’ of collecting the cash from Advisers who are fleeing the Profession? This has the ingredients to create a ‘civil war’ in our Profession with Consumers being the greatest loser.

As we have previously suggested, now is the time to write or visit your local sitting Federal Member of Parliament to alert them to the potentially dire circumstances.

It seems unfair that Minister Mulino is confronted with such a pivotal decision so early in his Ministerial tenure, but unfortunately his predecessor allowed the FSC inspired CSLR amendments to pass through the Senate under his watch.

The other issue the Minister has to deal with is former Minister Jones’s announcement last December 2024 that ‘any degree’ with appropriate supplements will satisfy the 1/1/26 Education requirements which induced many to adjust their study plans. We have suggested a 6 month extension to 1/7/26 is fair and reasonable to compensate for lost time or honour Minister Jones’ promise.

In regard to the ‘statutory Levy decision’ the Minister has the option of making for the outstanding $67.30m mentioned above, we have suggested in our Treasury submission that this decision is deferred until the CSLR structure is amended –  surely the Dixon victim Bureaucrats can wait a bit longer for their ‘dodgy’ cash handouts….

We will keep you updated with developments.