The National Insurance Brokers Association (NIBA) has restated its position against extending the Compensation Scheme of Last Resort (CSLR) to general insurance intermediaries, as Treasury consults on the role of professional indemnity (PI) insurance in funding compensation outcomes. In an earlier submission to Treasury, NIBA said general insurance intermediaries were excluded from the CSLR “in recognition of the low number of unpaid AFCA determinations involving the sector” and argued that expanding the funding base to sectors that have not produced unpaid determinations, directly or indirectly, would be “unjustified, disproportionate, and inconsistent” with the scheme’s purpose.
NIBA maintains that the design of any future CSLR changes should continue to distinguish between sectors with significant unpaid determinations and those with limited Australian Financial Complaints Authority (AFCA) findings that go unsatisfied. The association has also said it does not want funding challenges to become a “pretext for expanding the scheme’s reach” to parts of the market that have not been responsible for unpaid determinations. For brokers and their PI insurers, these issues arise alongside Treasury’s consultation on whether PI insurance could carry a larger share of compensation obligations before claims fall to the CSLR. That raises technical considerations for intermediaries around coverage structure, policy limits, exclusions, and aggregation, and how those features might interact with CSLR eligibility criteria and caps.
Treasury has opened a consultation on whether professional indemnity insurance should play a larger role in meeting compensation claims within the CSLR framework. The consultation paper asks industry to comment on “opportunities to enhance the effectiveness” of PI insurance in the CSLR context. The paper considers how expectations for PI cover might affect the number and size of claims on the CSLR, which is financed through levies on parts of the financial services industry. The consultation follows Minister for Financial Services Daniel Mulino’s confirmation of a $47.3 million excess levy for 2025–26, to be applied across several consumer‑facing subsectors to fill a current funding shortfall. General insurance intermediaries currently sit outside the CSLR’s scope, reflecting what policymakers and stakeholders describe as a relatively low number of unpaid AFCA determinations involving brokers. Whether that treatment remains appropriate as CSLR and PI settings develop is an issue for insurance market participants.
NIBA’s stance forms part of wider industry discussion on CSLR sustainability across financial services. In December 2025, representatives from banking, insurance, markets, and other sectors attended a roundtable hosted by Mulino to discuss the excess levy and possible changes to the scheme. Members of the Financial Industry Council of Australia (FICA) said they support the role of the CSLR “to act as a genuine scheme of last resort for victims of financial misconduct” and backed the steps announced to consult on changes “to ensure its sustainability.”
At the same time, FICA pointed to “significant concerns about the speed of reform to the CSLR to make it sustainable.” The group said that “consulting on reform options to ensure the CSLR is fair and sustainable in 2026 must be progressed as a priority, ahead of any discussions on managing the 2027 excess.” According to FICA, “certain design elements of the Scheme have created excessive costs that are flowing through to all customers of financial services, and these costs are expected to grow.” The FY26 excess levy has been set at $47.3 million, and early estimates for FY27 indicate this could increase to at least $137.5 million.
FICA has warned that “ongoing ad hoc levies to support a structurally flawed scheme send the wrong message and will simply add costs for all consumers,” and that, without reform, “consumers will continue to pay for growing flow‑on costs associated with propping up the scheme by entities unrelated to the financial misconduct.” FICA members said they intend to work “constructively with the government on implementing solutions to find the best pathway forward for all consumers” and welcomed what they describe as Mulino’s “genuine engagement on this issue.” Its membership includes the Australian Banking Association, Australian Finance Industry Association, Australian Financial Markets Association, Australian Investment Council, Australian Securitisation Forum, Council of Australian Life Insurers (CALI), Customer Owned Banking Association, Financial Services Council, and the Insurance Council of Australia (ICA).
