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Liberal Senator Luke Howarth has called for reforms into the CSLR and serviceability buffer, warning that both are flawed and not fit for purpose.
Luke Howarth, the shadow assistant treasurer and shadow minister for financial services, has warned that major changes need to be made to serviceability buffers to support home ownership and to the Compensation Scheme of Last Resort (CSLR), which he believes has been “unsustainable, unfair, and at risk of failure”.
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In an address to the Mortgage and Finance Association of Australia (MFAA) professional development day today (11 February), Howarth has also raised concerns over the Consumer Data Right (CDR), saying his party would prioritise reviews into these areas if they were elected.
Howarth has singled out the CSLR as a particular area that needs reform, criticising the scheme as unfair on brokers and possible future levies they may be charged, adding that flaws need to be fixed as a priority.
In his address, seen by The Adviser, Howarth acknowledged that although the CSLR levies on the broker channel remain significantly lower than what financial advisers are being charged, he has concerns that the levy for mortgage brokers will double this year.
His warning has come after the CSLR released its levy estimates for the financial year ending 30 June 2026 (FY26), with credit intermediaries expected to pay $2.72 million, a 51 per cent increase on the previous financial year ($1.8 million).
Commenting on the CSLR, Howarth has said: “The massive cost blowouts for financial advisers also opens the risk that the minister might issue a special levy to be paid by other subsectors, including mortgage brokers like you.”
“This doubles down on the unfairness inherent in how this scheme works and has been totally unacceptable,” he told the MFAA’s Looking Ahead 2025 digital PD day.
The senator stressed that if he were elected as the minister responsible for the scheme, his “immediate focus” would be cutting costs down, not spreading them around.
Brokers and industry bodies have also expressed fears over levies charged to brokers, including the MFAA, which included it in a list of recommendations for the Albanese government to consider in the 2025–26 federal budget.
Spotlight on serviceability buffer
The shadow minister has also flagged improving serviceability and access to finance, particularly for first home buyers, as priorities.
Howarth said: “Something that we are looking closely at is the APRA serviceability buffer and whether APRA adding on a 3 per cent buffer after 12 interest rate rises is appropriate.
“My colleagues Michael Sukkar and Andrew Bragg have been working hard on these issues and will be announcing more reforms on serviceability.”
Howarth has previously told The Adviser the serviceability buffer (which requires banks to assess borrowers on an interest rate 3 percentage points higher than the advertised rate) could be tweaked in order to better support home buyers.
CDR roadmap needed
Another area that the shadow assistant treasurer and shadow minister for financial services thinks needs reforming is open banking.
Commenting on the CDR, Howarth has claimed that a Coalition government would get the Consumer Data Right “back on track” while applauding the work of brokers.
He praised brokers during the speech, saying: “You are leading the way by using it to access more data, improve efficiency and make more informed credit decisions.”
Noting the upcoming federal election, the Liberal Senator added that a Dutton government “would provide a clear roadmap for the Consumer Data Right’s future and not leave it in limbo like the current government has”.
“There have been three lost years for the Consumer Data Right under this government, with it progressing at a snail’s pace,” he said.
Howarth’s words have come amid frustration from the financial services sector over the CDR, with recent data showing that 97 per cent of banks have open banking data issues for mortgages.
The shadow minister concluded his speech by claiming that his broad focus was on “less regulation, less red tape and getting out of the way so you can do your job”.
You can find out more about Howarth’s thoughts on what should be done about the serviceability buffer and the problems with the CSLR, in the Mortgage & Finance Leader podcast on The Adviser Podcast Network here:
Click here to listen on your device
[Related: Shadow financial services minister reveals how the Coalition would improve housing affordability]
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