Chartered Accountants Australia & New Zealand (CA ANZ) welcomes the opportunity to make a submission to the Post-Implementation review of the Compensation Scheme of Last Resort.

Our original submission to the Senate Committee Inquiry was prepared on 1 November 2024. In the intervening period between that date and now, our views have not substantially changed. Our views about the CSLR and related topics, for example the Dixon advisory collapse, have been confirmed as further information that has come to light such as the CSLR 25/26 financial year initial levy estimate.

It is essential that there is an appropriate external dispute resolution framework for the financial services sector that ensures industry participants are accountable for the financial products and advice they provide. The framework should appropriately protect consumers and, where necessary, allow them to access adequate compensation and redress.

The Compensation Scheme of Last Resort as introduced has significant shortcomings, which are now being highlighted by the collapse of Dixon Advisory, United Global Capital and other financial services organisations. These collapses have exposed flaws in the dispute resolution framework and also, arguably, the structure of the ASIC licensing regime.

A well-functioning dispute resolutions system should provide consumers with appropriate opportunity to seek recourse and restitution from financial services  providers where there are disputes or where losses have occurred.

It is inappropriate that small financial advice practices should bear the brunt of the compensation payments for the failure of larger financial services firms. Equally it is inappropriate that new entrants to the financial advice sector should be forced to pay for the failures of their predecessors for many years to come.

We strongly urge the government to indemnify financial advisers against claims for losses that were incurred before the formal commencement of the CSLR.