Protecting Consumers in the Superannuation System reforms

SMSF Association Response to the Government’s Protecting Consumers in the Superannuation System reforms

25 August 2026

Last week the Assistant Treasurer and Minister for Financial Services, Dr Daniel Mulino, announced a package of reforms to strengthen consumer protections and build the resilience of the Australian superannuation and financial system.

During the consultation phase, the SMSF Association advocated for targeted measures to address the true causes of consumer harm. We were pleased to see reforms which address harmful lead generation activities, including the banning of unlicensed real-time communication about superannuation.

The Association also advocated for stronger proactive regulatory oversight and surveillance rather than a reliance on investigation and enforcement after the consumer harm has occurred. We were pleased to see additional support for more timely and scalable regulatory action, and the strengthening of enforcement capability by enhanced data collection and data sharing.

It was also encouraging to see extensive reforms to the CSLR. These reforms will enhance the long-term sustainability of the CSLR and reduce the cost of CSLR levies for the financial advice profession.

The package of reforms also included several SMSF measures many of which were not canvassed during the consultation phase. The SMSF Association is supportive of measures which enhance the integrity of the SMSF sector, and which foster choice in our superannuation system. While the SMSF measures included in the reform package appear to have a sound policy basis, without additional information and a clearer understanding of their practical application, it is difficult to assert whether they will achieve the desired uplift in sector integrity without imposing unreasonable barriers on the establishment and operation of an SMSF.

As mentioned by the Assistant Treasurer in his speech last week, the Association has already commenced work on uplifting trustee education and supporting informed decision-making. It was encouraging to hear the Government is committed to working with the Association on building and reinforcing this work and we look forward to doing this in the weeks and months ahead.

It is also worth noting several measures which were floated during the consultation phase, and which were strongly opposed by the SMSF Association, no longer appear to be on the Government’s agenda. These include cooling off periods for superannuation fund rollovers, a prohibition on charging advice fees for rollovers, and the exclusion of SMSFs either by choice or compulsion from the CSLR.

While the continued inclusion of SMSFs in the CSLR may come at the cost of a small CSLR special levy (expected to be no more than $20 per fund for 2027/28) being imposed on SMSFs in income years when a special levy is required, this is a small price to pay to ensure SMSF members, who find themselves with an unpaid AFCA determination, are treated the same as all other retail investors.

The following table provides a snapshot of the SMSF Association’s response to each of these measures, which we will keep updated for members as the reforms progress. As always, we welcome your feedback, which you can email to [email protected]

Peter Burgess

Chief Executive Officer

Protecting Consumers and the Promise of Superannuation in an Evolving Financial Ecosystem

1. Protections for Members of APRA-Regulated Superannuation Funds

Measure	SMSF Association Response
1.1 Legislating an obligation on trustees to set and ensure compliance with caps on advice fee deductions from member accounts.	Support, noting many APRA regulated Superannuation Trustees already do this in practice.
1.2 Amending the Superannuation Industry (Supervision) Act to increase maximum civil penalties to 50,000 (up from 2,400 units) penalty units for core breaches of trustee obligations.	Broadly support, however noting that fines are ultimately paid from members retirement savings.
1.3 Supporting APRA’s ongoing platform governance work by providing APRA with the power to set risk-based capital requirements for superannuation trustees offering higher-risk investment options to their members.	Broadly support.
1.4 Providing ASIC with the power to direct superannuation trustees to commence a remediation process when an investment option fails and there is reason to suspect a failure of trustee obligations.	Support.

2. Protections in the Self-Managed Superannuation Fund Sector

Measure	SMSF Association Response
2.1 Empowering the ATO to prevent rollovers to new SMSFs in situations where the ATO is investigating concerns of fraud, financial abuse, misconduct or potential harm.	Broadly support, provided the criteria is well defined. We note the ATO already has the power to decline registration if the trustee does not meet the registration eligibility, or there are factors that indicate the SMSF applicant is not fit and proper to be a trustee.
2.2 Introducing mandatory trustee education prior to SMSF registration, and supporting industry-led initiatives to uplift standards across the sector.	We do not support mandatory “one size fits all” education for all new SMSF trustees. We encourage the Government to explore options to uplift trustee education and will work closely with Government on measures which support informed decision-making.
2.3 Requiring SMSFs to hold uniquely identifiable bank accounts.	Support, however there are practical challenges that will need to be addressed.
2.4 Improving the utility and integrity of SMSF investment strategies by requiring SMSFs to have a written investment strategy upfront and consulting on options to uplift the quality of investment strategies.	Broadly support, however additional details are needed as well as a clearer understanding of how this will operate in practice. Consideration must also be given to how we can improve access to advice for prospective SMSF trustees.
2.5 Enabling the ATO to collect additional information on financial advisers and other entities involved in the establishment process and ongoing advice fee deduction arrangements.	Broadly support.
2.6 Aligning the SMSF supervisory levy with fund establishment and increasing the levy for the first time since 2013, from $259 to $295, to enable stronger consumer protection measures to safeguard SMSF members from financial abuse, scams, fraud and misconduct.	Broadly support.
2.7 Supporting the ATO to provide greater visibility to SMSF trustees, in particular those with low balances, of their returns compared to members of APRA regulated funds.	Broadly support, however requires additional information and a clearer understanding of the practical application.

3. Reforms to address harmful Lead Generation

Measure	SMSF Association Response
3.1 Banning unlicensed real-time communication with consumers about superannuation, with targeted exemptions to protect advocacy, educational and employment communications.	Broadly support, subject to appropriate exemptions.
3.2 Enhancing the requirements around the consent consumers must give to enable real-time contact.	Support.
3.3 Strengthening anti-hawking protections by limiting the existing exemption for financial advisers to existing client relationships, with consultation on targeted exemptions to ensure low risk arrangements and necessary contact with family members and third parties of existing clients are protected.	Broadly support, subject to appropriate exemptions.
3.4 Supporting more timely and scalable regulatory action by strengthening enforcement capability through the introduction of civil penalty provisions for breaches of the anti-hawking regime.	Support.
3.5 Requiring licensees to take reasonable steps to ensure lead generation activities are undertaken in compliance with relevant regulatory and legal requirements, including undertaking appropriate due diligence, maintaining records, and exercising ongoing oversight of lead generation arrangements.	Broadly support subject to an appropriate requirement to “take reasonable steps”.
3.6 Undertaking further targeted consultation on data harvesting and data broking in the financial sector, to determine potential high-risk forms of lead generation and consumer harm.	Support, noting that high-risk harm must be responded to in a timely manner to be effective in preventing consumer harm.

4. Enhancing Governance of Managed Investment Schemes

Measure	SMSF Association Response
4.1 Giving the Auditing and Assurance Standards Board (soon to become External Reporting Australia) the power to make mandatory audit and assurance standards for auditors of MIS compliance plans.	Support.
4.2 Requiring Responsible Entities of MISs to notify ASIC when they freeze or limit an investor’s ability to make redemptions.	Support.
4.3 As announced in the 2026-27 Budget, the Government will also soon consult on options to improve data collection on the MIS sector.	Support.

5. Financial Advice

Measure	SMSF Association Response
5.1 Proceeding with changes to intra-fund charging, targeted superannuation prompts and statements of advice as soon as possible.	Broadly support.
5.2 Introducing the New Class of Adviser regime to APRA-regulated superannuation and life insurance entities in the first instance, supported by strong safeguards against vertical integration through prohibitions on commissions, bonuses and volume-based payments that are features of sales-driven advice models. This measure will be subject to a review three years after commencement to evaluate the scope and operation of the reform.	Support, we need to improve access to advice for consumers. For this reason, we believe this measure should be extended to AFS licensees who provide personal advice to retail clients.
5.3 Simplifying the Best Interests Duty reform, by maintaining the existing obligation and safe harbour steps, and removing only the broadest safe-harbour step that is a barrier to scaled advice.	Support.
5.4 Progressing with the review of the Financial Planner and Adviser Code of Ethics 2019, to ensure that it is fit for purpose and supports the safe provision of scaled advice.	Support.
5.5 Progressing reforms to the education requirements for professional advisers to create a sustainable pathway for new advisers to enter the profession.	Support.
5.6 Supporting ASIC’s ongoing work on fee deductions and superannuation, to improve outcomes for superannuation fund members and SMSF trustees.	Support.

6. Compensation Scheme of Last Resort

Measure	SMSF Association Response
6.1 Limiting CSLR payments to actual losses for applications made to AFCA after 30 June 2027, without any change to AFCA entitlements.	Support. Proactive regulation is also vital to prevent large-scale consumer losses from first occurring.
6.2 Providing a more predictable framework for funding exceptional losses via the waterfall special levy mechanism.	Support, however sectors like MIS that contribute to large-scale consumer losses should be included in the primary funding levy.
6.3 Including all SMSFs as Tier 3 levy payers in the waterfall model in future years when a special levy is required. The total sector levy for SMSFs will be scaled relative to assets under management when compared to the broader superannuation trustees sub-sector, with a flat levy amount applying to all funds.	We do not support the inclusion of SMSFs as a Tier 3 levy payer on a permanent basis. However, victims of financial misconduct should not remain uncompensated because the regulatory and funding model have failed them. Given the scheme’s severe funding shortfall, we acknowledge the need for the cost of compensation to be spread widely across the financial services sector. Therefore, we support the inclusion of SMSFs in the waterfall model on a temporary basis. We note the special levy formula, which currently sets a $100 minimum, will be amended to ensure appropriate treatment of SMSFs. We also note the special levy for SMSFs is not expected to exceed $20 per fund in income years when a special levy is required.
6.4 Allocating the FY26-27 special levy according to the waterfall model outlined in the Government’s consultation process, with further analysis, in consultation with relevant stakeholders, to support the Minister’s decision on specific sub-sector allocations in Tier 1 and 2 of the waterfall.	Broadly support, but victims should not remain uncompensated because the regulatory and funding model have failed them. However, consideration should be given to the ability of sectors to bear the burden of the funding shortfall, particularly AFS licensees who are primarily SMEs.
6.5 Supporting the Productivity Commission’s business dynamism inquiry, including its consideration of insolvency frameworks, to help inform the Government’s consideration of how those frameworks interact with the CSLR and whether further reforms could improve the recovery of AFCA determinations.	Support.
6.6 Targeted reforms to improve the efficiency of the CSLR, including: expanding the CSLR operator’s statutory recovery rights to additional available sources; allowing the CSLR operator to notify the Minister of a revised estimate before a levy period begins; reducing the disallowance period for CSLR levy instruments from 15 to 5 sitting days, consistent with ASIC levy instruments; removing the need for consumers to notify AFCA of non-payment where AFCA already knows the firm cannot pay; allowing compensation to be paid to more than one account or payee where need be; developing a retail-facing metric for large securities and futures exchange participants, reducing the potential distortion of wholesale and institutional activity on special levies; allowing firm-level levy metrics to be fixed at a defined point, so correcting one firm’s data does not require recalculation across the entire sub sector; amending the securities-dealer metric to capture all relevant transactions, including exchange-traded products that may not technically meet the statutory definition of a security; and correcting the special levy formula so the intended $100 minimum operates, adjusted for appropriate treatment of SMSFs.	Support.