Association raises concerns over rising levy costs and calls for a fairer funding model
The Mortgage & Finance Association of Australia (MFAA) has backed the federal government’s decision to review the Compensation Scheme of Last Resort (CSLR) amid concerns over rising levy costs for mortgage and finance brokers.
Under the current levy structure, brokers are set to contribute $2.72 million to the FY26 CSLR levy, part of a total industry-wide charge of $78 million. This represents a 66% increase from the initial levy period.
MFAA chief executive Anja Pannek (pictured above) questioned the fairness of the funding model, pointing out that mortgage brokers account for just 3.6% of pre-CSLR claims determinations.
“The levy for credit representatives is increasing from $33.85 to $52.04 per credit representative,” Pannek said. “This is largely due to increased operational costs rather than claims from our sector. Small businesses are in effect paying for the running of the scheme – we will be questioning whether this is fair.”
A key issue raised by the MFAA is the $50 million unfunded scheme levy, which remains at the discretion of the financial services minister. This funding gap has arisen largely due to anticipated claims from the financial advice sector, where compensation claims are expected to exceed $70 million. However, scheme legislation caps industry contributions at $20 million per sector.
The MFAA has called for a fairer allocation of costs, noting that there have been no unpaid determinations from the credit intermediary sector since the scheme’s implementation.
“The mortgage broker best interests duty is serving consumers well and is embedded in the broking industry,” Pannek said. “The costs of the CSLR must be fair and proportionate for the broker industry and the broker industry should not be funding losses that have originated in other financial services sectors.”
CPA Australia has earlier expressed support for the government’s CSLR review, citing concerns over the rising levy burden on financial advisers.
Meanwhile, the MFAA has also finalised its submission for the 2025-26 federal budget, outlining 16 recommendations aimed at improving competition in the home lending sector, strengthening cybersecurity, ensuring regulatory settings remain fit for purpose, and partnering with the industry on sustainability initiatives.
Among its key recommendations, the association has called for a review of APRA’s serviceability buffer, a streamlined home loan discharge process, and expanded efforts to improve financial literacy. It has also urged the government to ensure CSLR levies remain proportionate and reflective of industry risk.
The MFAA said it will continue engaging with policymakers to ensure the broking sector’s interests are considered in both the CSLR review and the upcoming federal budget.
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