Level the playing field: universally high standards of governance and oversight needed to protect Australians' super

Super Members Council

The Super Members Council has called for a comprehensive set of consumer safety reforms to create a level playing field of universally high standards of governance, accountability and oversight across Australia’s super system to prevent further Shield and First Guardian style collapses.

In its submission to Treasury’s proposed reforms to strengthen consumer safety, the Council urges the Government to act decisively to lift governance and accountability obligations for both platforms and SMSFs to match the high standards that apply for mainstream APRA-regulated super funds.

“Right now, safety gaps in some parts of the super system are being exploited, putting Australians at serious risk of losing the money they’ve worked hard their whole lives to save for retirement,” said Super Members Council CEO Misha Schubert.

“We urgently need to level the playing field and lift protections and accountability in the parts of the system where they are weakest, bringing them up to the same high level as the strong safeguards that apply in mainstream super funds - so that every Australian can have confidence their super is safe, protected and working hard in their best interests.”

Almost 12,000 Australians lost more than $1 billion of their life savings in the Shield and First Guardian collapses, and comprehensive safety reforms are urgently needed to avoid future consumer disasters.

Those cases show how aggressive lead generation practices, high‑pressure sales tactics, conflicted pay incentives and poor oversight can funnel Australians out of safe, high-performing, low-cost, tightly‑regulated super funds and into high-risk, unsafe or unsuitable products such as the collapsed schemes, losing people’s compulsory life savings and undermining trust in super safeguards.

Those failures were not isolated incidents, but an ominous warning sign about serious risks of consumer harm in any part of the super system where governance, accountability and regulatory oversights are weaker.

Access to safe, affordable, high-quality financial advice is also a crucial consumer protection, and a key defence against predatory practices. Each day of delay in the Delivering Better Financial Outcomes (DBFO) reforms is a day that leaves Australians exposed to safety risks, with the affordable advice gap making consumers more vulnerable to lead generation and high‑pressure sales.

This is particularly important when APRA data shows advice fee deductions from super have doubled over the past five years — growing from $1.464 billion in 2020 to $2.975 billion in 2025, with a sharp $1.1 billion increase in just the past two years, largely concentrated in platform channels.

ASIC's Report 781 on advice fee charging raised concerns about "inappropriate balance erosion" of members' retirement savings and pointed to "weaknesses in trustees' assurance processes" as a key risk factor driving harm.

To protect Australians from more Shield and First Guardian style collapses, the Council is calling for:

• A major uplift in consumer safety protections across the rest of the super system architecture to match the highest APRA‑regulated standards that apply in master trust super funds.
• Urgent legislation to pass the DBFO reforms.
• A ban on conflicted payments and incentives that distort investment decisions and drive harmful switching behaviour. Restrictions should cover any fee, rebate, marketing/support payment, “shelf-space” payment, data/access fee, or other benefit provided directly or indirectly in exchange for platform access.
• Ending “trustee-for-hire” models.
• Stronger governance of platforms, including, mandatory due diligence standards, risk-based holding limits for higher-risk investments and active trustee gatekeeping of products
• Targeted protections at the point of SMSF establishment and switching, including mandatory, standardised warnings when moving to higher-risk settings, instead of proposed cooling off periods.
• Closing the SMSF protection gap, including clear warnings about the loss of consumer protections when leaving APRA-regulated super, mandatory education and knowledge checks for SMSF trustees, equivalent safeguards on advice fee deductions, and minimum balance recommendations.
• Stronger oversight of advice fee deductions, including a requirement for trustee-set fee caps, protections against balance erosion for low balances, and stronger transparency and reporting.
• Better regulator visibility of switching and fund flows, enabling earlier intervention to stop harm.
  
  

A recent survey of more than 1,000 Australians found strong public support for the Government to be bold in strengthening consumer protections.

“Millions of low- and middle-income Australians also urgently need the promised DBFO reforms to become law to unlock access to safe, affordable guidance and advice from their own trusted super funds,” Ms Schubert said.

"They are a key consumer protection measure in their own right that will help protect Australians from predatory social media ads and high-pressure sales.”