Super’s two-speed governance problem

Welcome to TRR #17 for 2026.

Thirteen years ago, when writing about Australia placing third among the world's elite retirement systems, we made a key distinction between the APRA-regulated space being considered and the SMSF one that wasn’t. Australia’s strong showing rested almost entirely on governance reforms applied to APRA-regulated funds, while the self-managed sector sat largely outside the frame. We pondered then whether that gap would eventually catch up our retirement income system. It did.

Last year, in a piece from which this newsletter sprouted, we argued something related but larger; that the superannuation system as a whole had crossed an irreversible point, from an accumulation-era scale game into a retirement-era stewardship game, and that frameworks optimised for asset-gathering were no longer fit for the task of guiding heterogenous membership bases to and through retirement.

This edition is about the just-announced reforms, where those two arguments converge.

The Assistant Treasurer and Minister for Financial Services, Dr. Daniel Mulino, announced a sweeping package of superannuation and financial system reforms last week. The package is explicitly framed as a response to the collapses of the Shield and First Guardian Master Funds, which affected almost 12,000 people and put at risk around $1 billion in retirement savings, and to broader SMSF-sector losses that have strained the Compensation Scheme of Last Resort (CSLR). The reforms span six areas.

APRA-regulated fund protections introduce a legislated trustee obligation to cap advice fee deductions, lift maximum civil penalties for core breaches of trustee obligations, give APRA the power to set risk-based capital requirements for higher-risk investment options, and empower ASIC to direct trustees to commence remediation when an investment option fails.

SMSF sector protections will give the ATO power to block rollovers to new SMSFs under ATO investigation for fraud, financial abuse, misconduct or potential harm. It will also require mandatory trustee education before registration, require uniquely identifiable bank accounts and upfront written investment strategies, expand ATO data collection on SMSF advisers and establishment entities, lift the SMSF supervisory levy from $259 to $295 (its first increase since 2013), and improve return-comparison visibility for low-balance trustees.

Lead Generation reforms ban unlicensed real-time contact with consumers about superannuation (with carve-outs for advocacy, education and employment), tighten consent requirements, narrow the anti-hawking exemption for advisers to existing clients, introduce civil penalties for breaches, and impose due-diligence obligations on advice licensees.

MIS governance gives the soon-to-be-renamed External Reporting Australia power to set mandatory audit standards for MIS compliance plans and requires Responsible Entities to notify ASIC of redemption freezes.

Financial advice reforms proceed with collective charging and SOA changes, introduce the New Class of Adviser (NCA) regime first for APRA-regulated funds and life insurers (with anti-vertical-integration safeguards and a three-year review), and simplify the Best Interests Duty by removing only its broadest (last limb) safe-harbour step.

CSLR reforms limit payments to actual losses for AFCA applications made after 30 June 2027, add SMSFs as ‘Tier 3’ levy payers, and make a series of efficiency fixes to the special levy mechanism.

Even with at least five consultations having been undertaken on various aspects above over the past two-odd years, Treasury will consult further with industry and regulators on the proposed measures before producing (or refining) draft legislation.

In a 2013 piece on Australia’s place among the elite pension systems, we flagged a structural fault line that the (then) Melbourne Mercer Global Pension Index had inadvertently exposed: Australia's strong ‘Integrity’ score that year was driven almost entirely by Stronger Super reforms applying to APRA-regulated funds, while SMSFs (which were half their current size) remained largely untouched by the same governance uplift.

We wondered aloud then whether that governance gap would eventually weigh on Australia's standing among the world's best retirement systems. Last week’s announcement is, in effect, the answer arriving more than a decade later.

Mandatory SMSF trustee financial capability, unique SMSF bank accounts, upfront written investment strategies, and ATO rollover-blocking powers are precisely the kind of parallel governance uplift that was missing for SMSFs when we first raised concerns.

This package also reads less like a single reform and more like the legislative codification of a story ASIC has been telling for over a year. Commissioner Alan Kirkland's "chain of responsibility" framing (fund operators, lead generators, advisers, research houses, auditors and trustees, each bearing responsibility proportionate to their role in overall system integrity) is now to be written into law.

The lead generation ban targets the data brokers and telemarketers at the front of that chain. The MIS governance changes target the platform operators (and auditors) in the middle, while the advice fee cap and civil penalty increases target advice licensees and RSEs at the late-accumulation-into-early-decumulation customer journey.

Read against our July coverage of ASIC's Report 833, the platform trustee dimension of this package is unmistakable. Platform trustees, commercially dependent on the very advisers they're meant to police, face a structural conflict that profit-to-member funds, more reliant on default Superannuation Guarantee flows, largely avoid.

We pontificated whether the following 18 months would likely bring legislated reporting obligations on suspicious switching and tighter fee cap flexibility within the platform segment specifically. This package delivers close to that via the mandated fee deduction caps and the fiftyfold increase in maximum civil penalties for RSEs.

The more consequential shift may be the one we identified in our own founding argument for this newsletter: that the superannuation system crossed an irreversible point some time ago, morphing from an accumulation-era scale game into a retirement-era ‘service & stewardship’ game, one in which 16 million-plus members in APRA-regulated funds are no longer well served by governance settings optimised primarily for asset gathering.

The Shield and First Guardian collapses are the sharpest illustration yet of what happens when that transition is incomplete. Pre-retirees and the newly retired, the cohorts with the least capacity to recover a loss, are also the two cohorts most exposed to high-pressure switching into unregulated or under-governed structures. Seen this way, last week’s announcement isn't really about platforms, lead generators or bad actors in isolation. It is an attempt to close the gap between the accumulation-era system we built and the retirement-era system Australians now need.

One open question remains live: the New Class of Adviser regime is confined to APRA-regulated superannuation and life insurance entities "in the first instance". This leaves unclear whether platform trustees, the segment most implicated in Report 833, will eventually be brought within scope, or remain reliant on the fee-cap and penalty levers alone. No doubt an area of high contestability, we watch on with interest.