Corporations (Financial Services Compensation Scheme of Last Resort—Special Levy) Determination 2025

Special levy - A one-off levy imposed under subsection 1069H(2) of the Corporations Act when a revised estimate for a sub-sector indicates that the sub-sector’s levy cap would be exceeded. It is separate from the annual CSLR levy imposed under section 9 of the Financial Services Compensation Scheme of Last Resort Levy Act 2023. The special levy is a top-up mechanism to ensure the CSLR has sufficient funds to meet expected claims, fees and costs for the levy period.

2025-26 levy period - Defined as the 12-month period from 1 July 2025 to 30 June 2026. All references in the determination to sub-sector membership and amounts are tied to this period.

Sub-sector - A category of financial services licensees or credit licensees defined in the ASIC Supervisory Cost Recovery Levy Regulations 2017 (the ASIC Levy Regulations). The determination lists 23 sub-sectors, each defined by a specific provision of those regulations (e.g., credit providers sub-sector is defined by subsection 26(1) of the ASIC Levy Regulations). The sub-sector definitions are incorporated by reference and may be updated over time. This means a licensee’s liability depends on its classification under the ASIC Levy Regulations, which are separate from the CSLR framework.

Licensed personal advice sub-sector - Although not explicitly defined in this instrument, it is the sub-sector that triggered the special levy. It is referenced in the preamble and section 7 note. It corresponds to the sub-sector under item 12: licensees that provide personal advice on relevant financial products to retail clients. That sub-sector receives the largest allocation ($10.39 million), but the special levy is spread across all sub-sectors, not just the one that caused the cap breach.

Sub-sector levy cap - A limit on the amount that can be raised from a particular sub-sector in a levy period. When a revised estimate shows that existing levy amounts plus anticipated claims would exceed the cap, a special levy may be imposed. The determination’s note to section 7 confirms the total does not exceed the difference between the revised estimate and levy already paid.

ASIC Levy Regulations - The primary source for the definition of each sub-sector. The determination lists 23 sub-sectors by name, but to determine which licensees fall within each, a practitioner must cross-reference the ASIC Levy Regulations (which are themselves legislative instruments). This creates a two-step compliance exercise: identify the correct sub-sector definition, then confirm membership.

The determination directly affects all Australian financial services licensees and credit licensees that are members of any of the 23 listed sub-sectors for the 2025-26 levy period. These include, but are not limited to: credit providers ($7.23 million total), insurance product providers ($2.6 million), superannuation trustees ($6.1 million), responsible entities ($6.49 million), securities dealers ($1.19 million), deposit product providers ($1 million), and the personal advice sub-sector ($10.39 million). The list is comprehensive and covers virtually all regulated financial firms, from large banks to small margin lenders. The margin lenders sub-sector is allocated only $1,042.52 in total, which suggests either very few members or extremely low claims exposure. The small and medium amount credit providers sub-sector is allocated $1.64 million.

Indirectly, the levy affects consumers and the broader economy. The special levy is a cost of business for licensees. Firms that cannot absorb the cost may pass it on to clients through higher fees or reduced services. For personal advice licensees, which already face substantial regulatory costs, the $10.39 million special levy adds to the pressure on the viability of the advice industry. The burden is not limited to the sub-sector that triggered the cap; it is distributed across 22 other sub-sectors. This cross-subsidisation means that a credit provider, for example, will contribute to compensation for a failed personal advice firm, even if the credit provider had no connection to the failure. The CSLR itself is affected: the special levy ensures it remains funded to pay compensation, which in turn affects consumer confidence in the financial system. The Minister is the decision-maker, but the determination does not specify which entity will apportion the sub-sector totals to individual licensees. That function is likely performed by ASIC or the CSLR operator under the collection act. The ASIC Levy Regulations also affect the classification of licensees; changes to those regulations could shift a firm from one sub-sector to another, altering its levy liability under future special levies.

Duty to pay the special levy - The determination imposes a financial obligation across each sub-sector, but the duty to pay falls on individual licensees within those sub-sectors. The precise liability of each licensee is not set out in this instrument; it is determined by the apportionment mechanism under the Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023. Licensees must ensure that they pay the amount assessed by the collector (likely ASIC). Failure to pay will attract enforcement action under the collection act.

Right to be assessed correctly - Licensees have a right to expect that they are allocated to the correct sub-sector and that the apportionment of the sub-sector total is done in accordance with the law. The definitions of sub-sectors are in the ASIC Levy Regulations, so a licensee can review its own activities and licensing conditions to verify which sub-sector it belongs to. There is no mechanism within this determination for challenging an assessment, but general administrative law rights may apply.

Minister’s power and satisfaction - The Minister had the power to make the determination under subsection 1069H(2) of the Act, but only if satisfied of the matters in subsection 1069H(5). Those matters include that a revised estimate has caused the sub-sector cap to be near exceeded, and that the total special levy does not exceed the shortfall. The determination recites that the Minister was so satisfied. A licensee affected by the levy could potentially challenge the Minister’s satisfaction on judicial review grounds, though there is no evidence of such a challenge.

No duty to consult - The determination contains no requirement for the Minister to consult sub-sector participants before imposing the special levy. The levy is a top-up mechanism that can be triggered quickly. This means licensees have no advance warning or right to object. The amounts are fixed and non-negotiable.

Interaction with other levies - The special levy is in addition to the ordinary CSLR levy and the ASIC supervisory cost recovery levy. Licensees have no right to set-off or reduction in other levies because of the special levy.

The determination itself does not create any penalties. It is a legislative instrument that specifies the amounts to be raised from each sub-sector. The enforcement of payment is governed by the Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023, which is referenced in a note to section 6. That act likely imposes civil penalties for late payment or non-payment, including interest charges and recovery proceedings. The determination does not specify a due date or a payment mechanism; those details are left to the collection act. ASIC is the usual enforcer of financial services law, and it would be responsible for collecting the levy and taking action against defaulting licensees. Licensees that fail to pay may face suspension or cancellation of their licence under the Corporations Act, though that is not stated in this instrument.

The amount of $47.29 million is substantial, and the cost of collection and enforcement could be material, especially for small sub-sectors like margin lenders where the total is only $1,042.52. It is possible that the cost of collecting from a single margin lender might exceed the amount due, creating an economic disincentive to enforced collection. The determination does not address this. There is no penalty for the Minister if the revised estimate turns out to be inaccurate; the special levy is based on the estimate at the time of satisfaction. If the actual claims are lower than estimated, the excess may be refunded or held for future periods, but again, the instrument is silent. Practitioners should be aware that non-payment of the special levy is likely a breach of the law with consequences separate from those in the Corporations Act generally. The Corporations Act provides for criminal penalties for certain contraventions, but the collection act is the primary enforcement vehicle. The determination is a legislative instrument and is subject to disallowance by Parliament, but it has been made and registered.

This determination operates within a multi-layered statutory framework. The primary enabling legislation is the Corporations Act 2001, specifically sections 1069F and 1069H which deal with CSLR levy caps and special levies. The Financial Services Compensation Scheme of Last Resort Levy Act 2023 provides the general power to impose the CSLR levy, and section 9 of that act is the operative provision for the special levy (referenced in section 5 of the determination). The Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023 governs how the levy is collected, including the apportionment of sub-sector totals to individual licensees, payment dates, and enforcement. The determination itself refers to the collection act in a note, confirming that the special levy is collected under that act.

The ASIC Supervisory Cost Recovery Levy Regulations 2017 are critical: they define each of the 23 sub-sectors. This cross-reference means that any amendment to the ASIC Levy Regulations (for example, adding a new sub-sector or redefining an existing one) will automatically change the category of licensees liable under this determination, because the determinations adopts the definitions as in force from time to time (see the note to section 4 referring to paragraph 13(1)(b) of the Legislation Act 2003). Practitioners must therefore monitor changes to the ASIC Levy Regulations to ensure their sub-sector classification remains correct.

The determination does not interact with the Taxation Administration Act 1953; it is a levy, not a tax, and is unlikely to be deductible in the same way. However, it is a business expense for licensees. There is no explicit interaction with the Australian Securities and Investments Commission Act 2001, but ASIC is the regulator and likely administrator of the CSLR. The determination is a legislative instrument registered under the Legislation Act 2003; it is subject to disallowance and parliamentary scrutiny, though it has passed the registration stage.

The special levy is separate from the ASIC Supervisory Cost Recovery Levy (the annual fee levied on licensees to fund ASIC’s operations). Licensees will pay both levies, increasing their total regulatory burden. The determination does not provide for any offset or reduction in other levies because of the special levy.

This is the first special levy determination made under the CSLR framework for the 2025-26 levy period. The instrument is dated 11 December 2025 and is as originally made. It has no amendment history. There is no evidence that it replaces or amends any prior determination, though it is possible that a similar determination was made for earlier levy periods (none are referenced). The instrument is self-contained: it defines only the 2025-26 levy period and does not create ongoing obligations. Future special levy determinations for later periods may be made in the same form, but each would be a separate instrument.

The instrument specifies that it commences the day after registration. There are no transitional provisions or savings provisions. Because it is a legislative instrument, it can be amended by a later instrument, but no such amendment is pending. The Minister could make a new determination that varies the amounts for the same levy period, but that appears unlikely given the determination is already made. The definitions of sub-sectors are incorporated by reference to the ASIC Levy Regulations, which are amended from time to time; any change to those regulations after the determination’s making could affect which licensees fall within each sub-sector for the 2025-26 levy period. However, the determination itself is not amended; only the interpretation of the sub-sector definitions changes. This creates a potential uncertainty: a licensee might be in one sub-sector at the time of the determination but move to another sub-sector due to a later amendment to the ASIC Levy Regulations, even though the levy period started. The determination does not address this scenario.

As at the date of the instrument (11 December 2025), there is no litigation history. The determination is new and has not been challenged. However, given the significant financial impact, it is possible that licensees or industry associations could seek judicial review of the Minister’s decision to make the determination. Grounds for challenge might include: the Minister was not properly satisfied under subsection 1069H(5) (e.g., the revised estimate was unreasonable), or the determination fails to comply with the procedural requirements of the Legislation Act 2003. There is no reference to any court or tribunal in the instrument. The note to section 7 indicates the total does not exceed the calculated shortfall, but the note carries no legal weight (it is a note, not an operative provision). If the Minister’s satisfaction were successfully challenged, the determination could be set aside, leaving the CSLR underfunded for the period.

No cases involving a similar special levy determination under the CSLR have been reported, as the scheme is relatively new. The CSLR was established by the Financial Services Compensation Scheme of Last Resort Act 2023, so this determination is among the first of its kind. Practitioners should watch for any future litigation because a successful challenge could affect the validity of future special levies. The determination itself does not create a private right of action; it is an administrative instrument. Any challenge would likely proceed under the Administrative Decisions (Judicial Review) Act 1977 or the original jurisdiction of the Federal Court.

The most striking feature is the cross-subsidisation across sub-sectors. The special levy was triggered because the licensed personal advice sub-sector was at risk of exceeding its cap, yet the determination imposes the levy on 23 sub-sectors, including many that have no connection to the advice industry. A credit provider or superannuation trustee, for example, must pay a share of compensation for a failed personal advice firm. The rationale is that the CSLR is industry-funded, but the spreading of the cost dilutes the link between risk and payment. The personal advice sub-sector still pays the largest amount ($10.39 million), but other sub-sectors collectively pay the remaining $36.9 million. This may be economically inefficient: it reduces the incentive for personal advice firms to manage risk if they know other sub-sectors will bail them out if the cap is exceeded.

The determination does not specify how the sub-sector totals are apportioned among individual members. A licensee in a sub-sector with only a few large players (e.g., deposit product providers) could face a very large individual levy, while a licensee in a populous sub-sector (e.g., credit intermediaries) might pay a small amount. The apportionment method is in the collection act, but the determination itself provides no indication. This uncertainty makes it difficult for licensees to budget.

The margin lenders sub-sector is allocated only $1,042.52 total. The cost of collection likely exceeds that amount. This suggests the sub-sector has very few or no active margin lenders, or that the allocation is purely nominal. The determination does not explain the methodology behind each sub-sector amount. The Minister’s satisfaction is recital-only; there is no public explanation of how the $47.29 million total was derived or why each sub-sector received its specific allocation.

The instrument incorporates sub-sector definitions from the ASIC Levy Regulations “as in force from time to time” (section 4 note). If the ASIC Levy Regulations are amended after 1 July 2025 but before the levy is collected, a licensee could find itself classified into a different sub-sector with a different levy amount. The determination does not include a savings clause to lock the definitions to a particular date. This creates regulatory uncertainty.

The total special levy is $47,289,000.03 - an odd number with three decimal places. The note says it does not exceed the difference between the revised estimate and levy already paid, but that difference is not disclosed in the instrument. Licensees cannot verify that the total is correct. Compliance burden: licensees must track their own sub-sector classification, the apportionment proposal, and any collection notices. There is no exemption for small businesses. The instrument is short (7 sections) but dense in cross-references.

A licensee should begin by determining which of the 23 sub-sectors it belongs to for the 2025-26 levy period. This requires examining the definitions in the ASIC Levy Regulations, as incorporated by the determination. The key definitions are: section 72AA (claims handling and settling services providers), subsection 25(1) (credit intermediaries), subsection 26(1) (credit providers), section 31 (custodians), subsection 27(1) (deposit product providers), section 70 (insurance product distributors), subsection 72(1) (insurance product providers), subsection 64(1) (large futures exchange participants), subsection 65(1) (large securities exchange participants), section 40 (licensees providing only general advice), subsection 43(1) (licensees providing personal advice on relevant financial products to retail clients), subsection 42(1) (licensees providing personal advice on only products that are not relevant financial products), subsection 32(1) (managed discretionary account providers), subsection 23(1) (margin lenders), subsection 34(1) (operators of investor directed portfolio services), subsection 28(1) (payment product providers), subsection 35(1) (responsible entities), subsection 61(1) (retail OTC derivatives issuers), subsection 71(1) (risk management product providers), subsection 67(1) (securities dealers), subsection 24(1) (small and medium amount credit providers), subsection 36(1) (superannuation trustees), and subsection 33(1) (traditional trustee company service providers). A licensee may fall into more than one sub-sector; the determination does not address double-counting. The collection act may have rules for multi-sub-sector entities.

Once the correct sub-sector is identified, the licensee should monitor any notification from ASIC or the CSLR operator regarding the apportionment of the sub-sector total to individual licensees. The determination itself does not require any immediate action from licensees, but the collection act will impose payment obligations. Licensees should budget for an additional levy that could be substantial, particularly for those in sub-sectors with large total amounts (e.g., personal advice, responsible entities, superannuation trustees). The payment date is not in this instrument; it will be set by the collection act or by a subsequent determination. Licensees should ensure they have updated contact and payment details with ASIC.

Record-keeping is essential: retain evidence of the sub-sector classification, the basis for classification, and any payment receipts. If a licensee believes the classification is incorrect, it should seek clarification from ASIC or legal advice. The determination is a legislative instrument and is legally binding; non-payment may lead to enforcement under the collection act. Licensees should also monitor any changes to the ASIC Levy Regulations that could alter their sub-sector classification for the levy period, though such changes would be unusual mid-period. Finally, licensees should consider whether the special levy is tax-deductible as an ordinary business expense, and seek accounting advice accordingly. Compliance with this determination is ultimately compliance with the collection act’s mechanisms, not with the determination itself.