The Federal Government wants Australians with self-managed super funds to help pay for financial misconduct through future compensation levies. With a $170 million special levy already imposed on parts of the financial services industry, the Government says spreading the cost is fair. But why should Australians managing their own retirement savings be asked to contribute to losses they didn’t cause?
You work hard, put money into super and take responsibility for managing your retirement savings. You pay the fees, follow the rules and meet your obligations. Now the Government wants SMSFs to contribute to a compensation scheme covering eligible losses arising from financial misconduct.
Sound fair?
That’s the debate surrounding Australia’s Compensation Scheme of Last Resort (CSLR). The proposed contribution may be relatively small, but it raises much bigger questions about government accountability, financial regulation and who should ultimately pay when things go wrong.
The issue isn’t whether victims of financial misconduct deserve compensation. They do. The question is who should pay, and why.
What is the Compensation Scheme of Last Resort?
The CSLR was established to compensate eligible consumers who have suffered losses from certain types of financial misconduct and cannot recover the money owed to them.
It generally applies when the Australian Financial Complaints Authority (AFCA) has made an eligible determination in a consumer’s favour, but the financial services business responsible cannot pay. Compensation is capped at $150,000 per eligible claim.
The scheme is intended to be a final safety net, not a general guarantee against investment losses. It is funded through levies on parts of the financial services industry rather than directly from general government revenue.
On the surface, that seems reasonable. When financial services businesses do the wrong thing, there should be a way to help Australians who have suffered genuine losses.
But what happens when the compensation bill becomes much larger than expected?
A $170 million compensation levy. Who pays?
Australia’s financial compensation system is under significant pressure following major financial services failures, including the collapses of investment arrangements associated with Shield and First Guardian.
The Government has reported that these collapses affected almost 12,000 people and approximately $1 billion in retirement savings. Behind those figures are Australians whose retirement plans have been thrown into uncertainty.
In October 2026, the Government determined a $170.26 million special CSLR levy for 2026-27, spreading the cost across 23 financial services subsectors.
The levy includes approximately $40 million for responsible entities, $28 million for credit providers and $23.79 million for the APRA-regulated superannuation sector.
Importantly, SMSFs are not included in this particular levy.
However, the Government has separately announced plans to include SMSFs in future special levies when additional compensation funding is required.
And that’s where the debate becomes particularly interesting.
Why should your SMSF contribute?
In August 2026, Assistant Treasurer and Minister for Financial Services Daniel Mulino announced the Government’s intention to bring SMSFs into future CSLR special levy arrangements.
The Government argues that SMSFs form part of Australia’s broader financial system and benefit from the protection offered by the compensation scheme. Spreading the cost more widely, it says, will help maintain a sustainable safety net.
The Minister estimated that individual SMSFs would likely contribute no more than $20 per levy period when a special levy is required. This is an estimate, not a legislated maximum.
Twenty dollars might not sound like much. But the amount isn’t really the point.
If you manage your own super, make your own investment decisions and pay for your own compliance, why should your SMSF contribute to the cost of misconduct committed by financial services businesses you may never have dealt with?
It’s a legitimate question, and one the Government should be prepared to answer.
There is another side to the argument. SMSF members can also be victims of financial misconduct, and eligible members may benefit from the compensation scheme. The SMSF Association has supported retaining that protection, even if it means a modest contribution from SMSFs.
That makes this a genuine policy choice, not simply a case of the Government charging people for nothing.
But it doesn’t remove the need to scrutinise how the costs are calculated, allocated and controlled.
Where was the oversight?
Perhaps the most troubling aspect of the recent financial failures is not simply the amount of money lost, but how so many Australians came to be exposed to problematic investment arrangements in the first place.
The collapses associated with Shield and First Guardian have raised serious questions about financial advice practices, investment oversight, lead generation, product governance and regulatory safeguards.
ASIC has taken regulatory and enforcement action, while the Government has announced additional consumer protection reforms. But Australians are entitled to ask whether the existing safeguards were strong enough, whether warning signs were acted upon quickly enough and what will prevent similar failures in the future.
When the financial system fails to prevent serious harm, should the response be to spread the compensation bill across more Australians?
The Government’s proposed funding approach may help compensate victims, but funding compensation and preventing misconduct are two different problems.
A system that compensates people after their retirement savings have disappeared is important. A system that prevents avoidable financial harm in the first place is even better.
Australians should expect both.
Another cost for Australians managing their own super?
SMSFs already face establishment and administration expenses, independent audit costs, regulatory obligations and an annual ATO supervisory levy.
People who establish SMSFs generally accept additional responsibilities in exchange for greater direct control over their retirement savings.
Adding another potential levy, however small, deserves scrutiny.
Under the Government’s proposed arrangements, SMSFs would become part of the third tier of a special levy funding model, sometimes called a waterfall. Their overall contribution would be calculated relative to the size of the SMSF sector, with a flat amount applying to individual funds.
The Government estimates that this would generally mean no more than $20 per SMSF in a period when a special levy is required.
But several questions remain. How will the amount be calculated in future years? Could it increase if compensation costs continue rising? What safeguards will ensure the scheme remains financially sustainable?
Because once a new charge is introduced, it’s reasonable to ask what prevents it from growing.
The Government should be able to explain not only why SMSFs should contribute, but also how future costs will be controlled and whether those most closely connected to financial misconduct are bearing an appropriate share.
What about the people who lost their super?
It’s important not to lose sight of the Australians at the centre of this issue.
The financial collapses prompting these reforms have had devastating consequences for some families. People approaching retirement have reported losing substantial savings, with their financial security and retirement plans thrown into uncertainty.
Many sought professional financial assistance, relied on people who appeared qualified and invested through arrangements they believed were legitimate.
Those people deserve appropriate remedies, effective enforcement and a regulatory system that works.
But supporting compensation for victims does not mean every proposed funding arrangement should be accepted without question.
The Government should demonstrate that its approach is fair, proportionate and sustainable, while pursuing those responsible for misconduct wherever the law permits.
Will your SMSF have to pay the new levy?
Not under the $170.26 million special levy determined for 2026-27. SMSFs are not among the subsectors included in that determination.
The Government has announced plans to include SMSFs in future special levies, but that extension has not yet become law. Legislative changes would be required before SMSFs could be charged under the proposed arrangements.
The Minister’s estimate of no more than $20 per SMSF is not an amount currently payable, nor is it a guaranteed maximum established by legislation.
The proposal is for contributions in future years when a special levy is required, rather than an automatic annual charge.
For now, SMSF members do not need to make any additional CSLR payment under the proposed changes.
A bigger question about Australia’s super system
Australians are continually encouraged to take responsibility for their retirement savings. We’re told to save, invest carefully, understand our super and plan for the future.
Those who establish SMSFs accept additional responsibilities in exchange for greater direct control over how their retirement savings are managed.
But greater personal responsibility should surely be matched by greater accountability from the institutions and regulators overseeing the financial system.
When financial misconduct occurs on a large scale, the priority should be identifying what went wrong, pursuing those responsible and strengthening the safeguards that failed.
Compensation is an important part of the response, but it cannot become a substitute for effective regulation.
And asking more Australians to contribute to the cost should never be treated as an automatic solution.
The bottom line? Australians deserve a financial system that protects their retirement savings, holds wrongdoers accountable and explains clearly why new costs are being imposed.
If the Government believes SMSFs should help fund compensation for financial misconduct, it should make the case openly, explain the long-term costs and demonstrate why the arrangement is fair.
Because whether the amount is $20 or $200, the principle matters.
Your super is your retirement savings. You have every right to ask where the money is going, who benefits and who is being held accountable.
Understanding the costs and responsibilities of an SMSF
At Freedom Financial Solutions, we help Australians understand the administrative process of establishing a self-managed super fund, including establishment documentation, fund registration and rollover requirements.
An SMSF provides greater direct control over retirement savings, but it also involves costs, legal responsibilities and ongoing compliance obligations.
If you’re considering establishing an SMSF, understanding those responsibilities and the regulatory environment is an important starting point.
Learn more about establishing an SMSF with Freedom Financial Solutions.
Official sources and further reading
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Federal Register of Legislation – CSLR Special Levy Determination 2026
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Treasury Ministers – Protecting Consumers and the Promise of Superannuation, August 2026
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Treasury Ministers – National Press Club address, August 2026
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SMSF Association – Protecting Consumers in the Superannuation System Reforms
General information only. Not personal financial advice. This article discusses government policy and regulatory developments as at 10 November 2026. Proposed arrangements may change. This article does not consider your personal objectives, financial situation or needs.