Chartered Accountants Australia and New Zealand (CA ANZ), CPA Australia and the Institute of Public Accountants ( The joint bodies) welcome Treasury’s proposed application of the Compensation Scheme of Last Resort (CSLR) waterfall framework for 2026-27 and acknowledge that it implements the Government’s announced reforms. While we do not support a permanent waterfall framework, we believe the proposed approach is a fairer outcome than requiring financial advice licensees to continue bearing the overwhelming majority of escalating CSLR costs.

We support the principle that sectors with a material connection to consumer losses should contribute proportionately to compensation costs. In particular, we consider it appropriate that responsible entities of managed investment schemes contribute where claims are linked to governance and product failures associated with schemes such as Dixon Advisory, Shield and First Guardian.

At the same time, the joint bodies believe the waterfall framework should be viewed as a temporary mechanism for allocating costs, not a substitute for addressing the underlying causes of consumer harm. In our view, many of the current funding pressures on the CSLR result from failures in product governance, distribution practices and misconduct, rather than from shortcomings in the scheme’s funding arrangements.

The joint bodies encourage Treasury to ensure any methodology used to identify connected sectors is transparent, evidence-based and capable of consistent application over time. We also continue to support measures that improve recovery of unpaid AFCA determinations and strengthen accountability across corporate groups, reducing pressure on the scheme and on contributing sectors.

Finally, The joint bodies reiterate our long-held view that government should contribute to CSLR costs. As the financial services sector already funds the regulatory activities of ASIC through industry levies, we believe it is equitable for government to share in the costs of the scheme.