Australia's Department of the Treasury has published a consultation paper seeking feedback on policy options to better protect members across the superannuation system, prompted by the collapse of the Shield and First Guardian Master Funds. The package canvasses reforms to uplift platform trustee governance, slow and harden inter-fund switching, constrain advice-fee deductions linked to switching, and introduce clearer compensation mechanisms where members suffer losses. The consultation proposes platform-focused governance measures including mandatory holding limits to reduce over-concentration, codified minimum due diligence for onboarding products, restrictions on conflicted listing and flow-related payments, and potential constraints on outsourced “trustee-for-hire” operating models. It also considers increasing maximum civil penalties under the Superannuation Industry (Supervision) Act 1993 (SIS Act), including an option to double the cap from 2,400 to 4,800 penalty units (from AUD 792,000 to AUD 1,584,000) or to better align SIS Act penalties with the Corporations Act 2001. For superannuation switching, options include a five-day waiting period with reconfirmation and prescribed risk notifications, applied either to all inter-fund rollovers or targeted categories such as rollovers to self-managed super funds or to defined “Platform RSEs” or funds offering “higher-risk” products. On advice fees, the paper canvasses prohibiting superannuation deductions for switching-related advice or codifying stronger receiving-fund controls such as mandatory reviews, fee caps and adviser onboarding and monitoring. On compensation, Treasury consults on a rules-based obligation for “Platform Trustees” to compensate members for “eligible losses” arising from external fraud or theft leading to product collapse, funded from trustee capital and triggered by an independent decision-maker, alongside an alternative option to give ASIC a directions power to require trustees to commence remediation. Submissions close on 22 May 2026, and the paper notes the proposals are not yet government-approved or law, with Shield and First Guardian matters before the Federal Court and under ASIC investigation.
Department of Treasury (Australia) 2026-04-07
Australia's Department of the Treasury launches consultation on stronger superannuation member protections after Shield and First Guardian collapses
The Department of the Treasury (Australia) has issued a consultation paper on policy options to strengthen member protections in the superannuation system following the collapse of the Shield and First Guardian Master Funds. Proposals include enhanced platform trustee governance, tighter controls on inter-fund switching and advice-fee deductions, higher civil penalties under the Superannuation Industry (Supervision) Act 1993, and new compensation mechanisms for member losses from fraud or theft.