The black lanyard

The first thing you should know about Advisely's expedition to Perth's FAAA Congress is that we had a sexy elevator. 

It wasn't sexy at first. When it shuddered to life, you’d hear a mechanical scream. But once you reached your hotel floor, a beautiful – barely intelligible, but beautiful – voice emerged from the din. 

“Level four.”

Just like that, you were home. Unburdened from the quotidian concerns of most hotel elevators – engineered primarily to handle the task of efficiently trafficking up to 400 kilograms of meat and Samsonite between levels – this one was free to do something new. Something sexy.

The second thing you should know about Advisely's expedition to Perth's FAAA Congress is that the CSLR was virtually the only thing anyone wanted to talk about. If you saw me there, leering out from behind the Iress candy wall like a trapdoor spider, we probably chatted about it right before I furtively scanned your lanyard. 

Hugh’s piece, linked here, makes this case pretty succinctly. But if you want hard data, consider the second plenary held in the afternoon of the Congress’s first day. It was a panel discussion between the FAAA's CEO Sarah Abood, chair David Sharpe, policy lead Phil Anderson and government relations manager George John. 

During that session, attendees were asked to submit their concerns to a dynamically-updating word cloud. By far the biggest term up on screen, after 267 votes, was “CSLR.” Other popular ones included: 

• “Cslr,” which is the same thing again but using the Guardian style guide
• “CSLR” but smaller
• “Legislation” 
• “Regulation” 
• “Compliance”
• “Cost” 

Call me Valerie Jaudon, but I’m beginning to see a pattern here. So you can imagine the palpable disappointment when, the very next day, Assistant Treasurer Daniel Mulino took the stage and said basically nothing. 

I wondered how I would spin this. Yet another in a series of articles where I frame “no news” as news in and of itself? Surely not. 

“I hope the Assistant Treasurer announces something soon,” I thought. I had other thoughts, too, like:

• “Maybe I could tie the Minister’s speech to something newsworthy. Anyone died recently?”
  
  
• “I remember when my internal monologue was about how many cardboard tubes it would take to build a rocket capable of reaching the Moon.”

As I pondered the above, two cars sped past our hotel on Adelaide Tce. The first was white, license plate P1NBALL. The second, in hot pursuit, was matte black – license plate F4LLEN. Coal on the wind. 

I knew what I needed to do: I’d go back inside, jump in the sexy elevator, take it up to level four and get to work. That day, Mulino told Congress that the furore over the 2025-26 CSLR levy would be resolved “in a matter of weeks.” Given this government’s history with advice reform roadmaps, taking him to task over that timeline seemed like a safe bet.

Sure, it was exactly the kind of piece I’d been trying to avoid – a self-referential, meandering op-ed that depended heavily on crosslinks to other Advisely articles in order to make any sense – but god damn it, I’ve been doing this for 10 years now, I realised, starting with my first AFA conference in Cairns, and each time I’ve gone I’ve worn the black lanyard; the lanyard of media, the observer, the #content worm, burrowing through convention centres from coast to coast, trying to find something – a quote, a Freudian slip, anything – that my fellow black lanyards had yet to publish in their daily EDMs, so there was no way in HELL I was going to let something as trifling as an underwhelming Ministerial address stop me from putting a piece together, even if it meant going back to the well, even if it meant doing the same piece of commentary over and over again until all is DUST and MEMORY and REGRET, and while I was starting to feel kind of warm while thinking about all this and could’ve done with a change of clothes, I’ve spent most of my adult life telling people on the West Coast that it’s a dry heat, which is categorically different to a wet heat, and you’d know this if you understood why the Bureau of Meteorology includes a “feels like” measure in its daily reports, which is not because they have an intuitive empathic connection with how you, personally, feel about any given temperature range, but because of the scientific fact that the amount of humidity directly influences the rate at which sweat evaporates off the skin, which is why you can’t talk about being HOT AND DRY until you’ve been HOT AND WET –

– but then, just a few weeks later, Daniel Mulino actually came through. 

Dry heat

Two days ago, he announced the outcome of the recent CSLR levy consultation: a special levy of $47.3 million would apply for FY26, but it would be distributed across all retail-facing subsectors included in the scheme. Advisers will pay 22% of the total (or around $10.4 million) over the $20 million subsector cap. 

Credit providers will pay around $6.8 million (15%), responsible entities will contribute $6.2 million (14%) and super trustees will cover $5.9 million (13%). The remainder will be spread between other sub-sectors, each contributing less than 10% each. 

Mulino said this decision reflects the fact that “all of those sub-sectors benefit from there being confidence in the financial services sector and appropriate consumer protection.” 

“It’s also a reflection of the fact that we need to allocate that broadly in order that it’s not overly burdensome on any particular sub‑sector,” he added.

To be clear: the particular sub-sector he’s referring to is personal financial advice. Per the revised levy estimate report provided by the CSLR's principal actuary, Finity Consulting, $67.3 million of the total $75.7 million in costs for FY26 can be attributed to advice-related claims. (Or can it?)

Following the special levy decision, per-adviser costs for 2025-26 will be around $2,000. That’s substantially less than the projected $4,300 each adviser would pay if the $47.3 million excess was attributable solely to personal financial advice, but it’s still well over the sub-sector cap.

In a statement, FAAA CEO Sarah Abood said that this was “unfair and unsustainable,” adding that “advisers paying the largest share of the levy had nothing to do with the misconduct that gave rise to the need for consumer compensation.”

Mulino's decision didn't sit too well with other industry bodies, either – albeit for different reasons. For example, ASFA CEO Mary Delahunty said that asking super trustees to participate in cross-subsidisation sets a “dangerous precedent” that “risks treating retirement savings as a convenient pot of money for solving problems.” 

The Finance Industry Council of Australia, which comprises some of the biggest financial services associations in the country, issued a statement urging immediate reform. Without it, the statement said, "consumers will continue to pay for growing flow-on costs associated with propping up the [CSLR] by entities unrelated to the financial misconduct."

Finance Brokers Association of Australia managing director Peter White was more pointed in his criticism. While he acknowledged that mortgage and finance brokers would only have to pay 1.4% of the special levy, he argued that “this needs to be dealt with within the sector that caused it.”

That’s the question, though, isn’t it? If we go by the letter of the law – specifically, the industry sub-sector definitions included in the Financial Services Compensation Scheme of Last Resort Levy Act 2023 – then “the sector that caused it” is personal financial advice. 

But as Mulino noted following the special levy decision, cases like Shield and First Guardian – not to mention Dixon, United Global Capital and Brite Advisors, which represent around 80% of FY26 claims – arise from “insidious, industrial‑scale practices.” Attributing these practices solely to the advice sector ignores the platforms, research houses, auditors, trustees and lead generators who all played a part.

And that’s without even addressing the fact that managed investment schemes are excluded from the CSLR. Against ample advice going all the way back to the St. John review in 2012, investment products were left out of the scheme’s design to prevent it becoming, in Senator Jane Hume’s words, “an insurance designed to pay compensation to any consumer who has lost money in an investment."

In my view (and that’s all I really have to work with), the decision to spread this year’s special levy across multiple sub-sectors is a tacit acknowledgement of these problems. But it’s not a permanent solution, either, especially given that the levy for FY27 is projected to hit $137.5 million – and could go even higher once the Shield and First Guardian claims start rolling in.

Mulino has a plan, though: in consultation with industry bodies and consumer groups, he's putting together "medium- and long-term options to ensure that the CSLR is fit for purpose." Based on initial discussions, these options include: 

• bringing other industry sectors into the CSLR
• super fund switching reforms
• strengthening regulation of managed investment schemes, including around related-party dealings and capital holding requirements 

These ideas will then be consolidated into a Treasury discussion paper. Mulino expects it to be published in February next year – and based on his mastery of the calendar thus far, I wouldn’t put it past him.

Kings of the wild frontier 

Anyway, you can see why I’m glad I didn’t end up writing that piece in Perth. 

To tell you the truth, I got distracted. On the final night, when I probably could have finished it, Hugh and I went to play darts with the rest of the Iress team. Things started off simple with a few rounds of 301, but eventually a new game emerged – one where each player controlled a donkey and needed to hit specific numbers to progress.

Here’s the catch, though: if you hit another player’s number, their donkey would move back a space. And because there were six of us, you were substantially more likely to move an enemy donkey back than move your own donkey forwards. 

We could’ve focused on our own numbers, individually working towards the benefit of all donkeys, but the rules of the game didn't incentivise us appropriately. 

Common sense tells me that I returned to Sydney at some point – back east, where the city spreads like mycelium and new houses are built over the old ones swallowed by the swamp. I’m sure there are eyewitnesses who could even attest to this. 

I know the truth, though: we’re all still in that pub, sabotaging each other’s donkeys until the end of time. Off in the distance, P1NBALL and F4LLEN rev their engines.