The Mortgage & Finance Association of Australia (MFAA) has taken its case for fairer Compensation Scheme of Last Resort (CSLR) settings directly to government, participating in a roundtable hosted by Assistant Treasurer Daniel Mulino alongside ASIC, APRA, AFCA, Treasury, and peak bodies from banking, insurance, superannuation, and financial advice.
The meeting follows Treasury's formal consultation on CSLR reform options, to which the MFAA has made a detailed submission. At the heart of the MFAA's position is a concern that mortgage brokers — a sector with an exemplary complaints record — are being asked to help fund misconduct they had no part in generating, as the scheme's costs escalate sharply due to the Shield and First Guardian collapses.
The numbers the MFAA put on the table are striking. Brokers facilitated 76.7% of all new residential home loans in the December 2025 quarter, yet complaints involving brokers account for less than 1% of all banking and finance complaints received by AFCA. Based on current estimates, no CSLR claims are expected to arise from the credit intermediary sector in FY27 — the same year the scheme's levy is forecast to hit $137.5 million.
The CSLR's own FY2027 Initial Levy Estimate makes the disparity stark: The credit intermediary sector — which includes mortgage brokers — is estimated to contribute $2.156 million — based on just 15 complaints and 10 expected claims — while personal financial advice accounts for $126.851 million, or 92% of the total levy, driven almost entirely by Shield and First Guardian.
MFAA CEO Anja Pannek (pictured) argued that the scheme's funding design needs to more closely follow the source of consumer harm. Under the current framework, levy costs are spread broadly across the financial services industry — meaning well-performing sectors effectively underwrite the failures of others.
"These figures highlight the importance of ensuring the CSLR remains fair, proportionate, and appropriately targeted. Sectors with strong consumer outcomes, low levels of misconduct and minimal compensation claims should not be required to shoulder an unreasonable share of the scheme's costs," Pannek said.
The MFAA's submission calls for changes to the special levy "waterfall" framework so that sectors more directly connected to the source of consumer harm contribute first before costs are spread more broadly — a structural change that would substantially reduce the exposure of the credit intermediary sector to claims arising from misconduct in financial advice or investment products.
The MFAA also wants stronger cost recovery mechanisms built into the scheme, simpler and more transparent levy administration, and compensation settings for financial advice complaints that are anchored to direct financial losses — all aimed at improving the scheme's long-term sustainability without unfairly burdening low-risk sectors.
Pannek was careful to frame the MFAA's stance as constructive rather than oppositional. The association supports the CSLR's consumer protection objectives — but argues the current trajectory is unsustainable.
"The MFAA supports the objectives of the CSLR as a genuine compensation scheme of last resort. However, it is critical that the scheme's design and funding arrangements remain sustainable and aligned with its original policy intent as a true last resort mechanism for consumers seeking redress after all other reasonable avenues of recovery have been exhausted," Pannek said.
With the FY27 levy estimate already at $137.5 million, the pressure on low-complaint sectors to absorb escalating costs is only set to intensify. For mortgage brokers running small businesses, the levy burden represents a direct operating cost — one the MFAA argues is disproportionate given the sector's track record.
"Achieving this balance will help ensure consumers remain protected while maintaining a fair and equitable framework for the financial services sectors that fund the scheme," Pannek said.
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