The Financial Planning Association (FPA) has again pushed for changes to the proposed Compensation Scheme of Last Resort (CSLR) in its pre-Budget submission.

FPA also reiterated the freeze on the Australian Securities and Investments Commission (ASIC) industry levy fee should be extended, for another year ideally, to help the sector cope with cost challenges.

CEO Sarah Abood says the CSLR and ASIC levy are two issues of particular importance to members in the current environment, and that the peak body continues to prioritise them in its discussions with both government and industry.

Legislation for the CSLR was tabled in parliament last month but the FPA has long maintained the scope of the remediation scheme is “too narrow” to provide adequate coverage to consumers.

The scheme – recommended by the Ramsay Review in 2017 and later backed by the Hayne royal commission – will provide compensation where an Australian Financial Complaints Authority (AFCA) determination remains unpaid and the determination relates to a financial product or service within the scope of the scheme.

The FPA says the scheme in its current format doesn’t seek to address some of the underlying causes of unpaid determinations, such as appropriate professional indemnity insurance. This will mean some consumers will be left unprotected with financial planners left to foot the bill.

“We believe the Government should amend the proposed legislation to establish the scheme so that its design reflects a broader base that includes all participants in the financial services industry,” the FPA says in its submission.

“This could be achieved by broadening the scope of the scheme to include the entirety of the jurisdiction of [AFCA].

“Such amendments would ensure equity for industry and consumers as well as long-term sustainability for the scheme.”

The FPA also calls on the Government to freeze the ASIC industry levy for a further 12 months to ensure cost certainty for the sector during the current financial year while Treasury progresses its ongoing review of the regulator’s Industry Funding Model.

Levy fees have been frozen at 2018/19 levels, at $1142 per adviser/planner, under a two-year relief scheme introduced by the previous Coalition government. The relief applied to the 2020/21 and 2021/2022 years.

The FPA says the freeze for financial planners should be extended to all industry sector participants who have been adversely affected by “inexplicably significant” ASIC levy fee increases.

“The current freeze has recognised the negative impact that ongoing significant ASIC industry fee increases have had on the financial services sector,” the FPA submission says.

“We acknowledge and appreciate the Government’s role to date in trying to control these spiralling increases for this sector.

“Many practitioners are sole traders or work in small and medium-sized practices, and their ability to absorb any additional regulatory costs is extremely limited.”

The FPA submission also called for all financial advice to have tax-deductible status; and for the Australian Taxation Office and Centrelink to improve their online access arrangements to ensure financial planners are able to act on behalf of their clients.