Reforms gain support despite key concerns

The Australian government has announced a package of superannuation reforms aimed at protecting consumers from harm and improving access to financial advice. Assistant Treasurer and Minister for Financial Services, Daniel Mulino, unveiled the measures, which include a crackdown on harmful lead generation and stronger investment governance.

Mulino announced the reforms at the National Press Club on 19 August, saying they would help prevent the kind of conduct that led to the Shield and First Guardian collapses. The government will also change the Compensation Scheme of Last Resort (CSLR), requiring self-managed super funds (SMSFs) to contribute to future special levies.

The Australian Superannuation Funds Association (ASFA) welcomed the package, saying it was a balanced response to the conduct behind the Shield and First Guardian collapses. ASFA chief executive Mary Delahunty backed tougher restrictions on harmful lead generation, saying they would help prevent people from being pressured into riskier investments.

Delahunty also welcomed progress on the government’s financial advice reforms, saying they would make it simpler and more affordable for working Australians to access basic financial advice through their super funds. However, she noted that further changes were needed to address institutional super members contributing to a scheme from which they cannot claim.

The Super Members Council (SMC) described the package as “one of the most important consumer safety reforms in a decade”, but argued that the government’s approach to the CSLR still risked shifting costs onto Australians whose retirement savings were held in mainstream super funds.

The Financial Services Council (FSC) backed the government’s approach to trustee accountability and closing loopholes in the anti-hawking regime, but cautioned against reforms inadvertently restricting legitimate pathways to advice. FSC chief executive Blake Briggs said the government must ensure that genuine advice conversations and legitimate referral arrangements continue to be permitted.

The Australian Prudential Regulation Authority (APRA) voiced support for the government’s proposed compensation framework, saying it would complement its existing work to strengthen investment governance and provide greater incentives for trustees to remediate governance failures.

APRA chair John Lonsdale said the government’s proposed compensation scheme would reinforce APRA’s proposals by creating a stronger incentive for trustees to remediate poor investment governance.

The reforms will likely have a significant impact on the superannuation industry, with many trustees and financial advisors needing to adapt to the new rules and regulations. As the industry continues to evolve, it’s essential that consumers are protected and have access to affordable and reliable financial advice, which could lead to growth in the Australian market.