On 19 August 2026, the Assistant Treasurer proposed a package of reforms under the Protecting Consumers in the Superannuation System (PCSS) banner, together with the Government’s response to the February 2026 managed investment scheme (MIS) consultation. The announcement is a statement of policy intention only. Most of the measures announced require the passage of legislation before they can take effect.
The Government has stated that the proposals respond to the Shield Master Fund and First Guardian collapses, and has framed them around three pillars:
- strengthening protections across the superannuation, advice and investment ecosystem;
- improving access to safe financial advice; and
- placing the Compensation Scheme of Last Resort (CSLR) on a firmer and fairer footing.
The key measures proposed include:
- measures directed at predatory lead generation;
- legislated superannuation trustee determined advice-fee deduction caps;
- a closer alignment of the maximum SIS Act civil penalties with those in the Corporations Act;
- an ASIC remediation directions power; and
- risk-based capital requirements to be set by APRA for trustees offering higher-risk investment options.
For responsible entities, the Government has proposed a comparatively light-touch response—strengthening audit and assurance requirements and introducing a mandatory ASIC notification when schemes freeze or suspend redemptions.
There is no draft legislation for any of the proposals and the Government has given no timeframe for the introduction of legislation or the proposed commencement of these changes. We expect these proposals will continue to evolve, potentially significantly, before any legislation is introduced into Parliament, and some measures may be modified, delayed or not proceed at all.
APRA has indicated it will consult on detailed capital standards once the legislative framework is settled. APRA has also announced an investment-governance consultation starting next month.
Impacts for super trustees
The Government has foreshadowed significant changes for super trustees, several of which track the April 2026 consultation paper. If the proposals are implemented as currently framed, the key impacts would include:
- Advice fee deduction caps: The Government proposes to legislate an obligation on superannuation trustees to set, and ensure compliance with, advice fee deduction caps. Most trustees already impose contractual caps, although ASIC Report 833 (29 June 2026) found that existing caps are generally too high and poorly designed. In his Press Club speech, The Hon Dr Daniel Mulino left open the possibility of caps being set out in the law, however, the fact sheet indicates that caps would be set by trustees.
- Prescribed SIS Act penalties: The Government proposes to increase maximum civil penalties for core trustee obligation breaches from 2,400 to 50,000 penalty units—approximately a 20-fold increase—aligning with the Corporations Act corporate maximum. This responds to the April paper’s analysis that current SIS Act penalties do not provide a credible deterrent for large trustees.
- Risk-based capital requirements: The Government proposes to empower APRA to set risk-based capital requirements for trustees offering higher-risk investment options, with the aim of ensuring they have the financial capacity to meet their compensation obligations. APRA has said it will consult on detailed design after the legislation is finalised, so the scope, calibration and cost of any capital requirements are not known at this stage.
- ASIC remediation directions: ASIC would gain a power to direct a trustee to commence a remediation process where an investment option fails and there is reason to suspect a breach of trustee obligations. The direction would initiate a process under which the trustee scopes the failure and determines responsibility and appropriate monetary or non-monetary outcomes. In The Hon Dr Daniel Mulino’s Press Club speech, he stated that trustees would be required to compensate their members’ full capital losses where a trustee breach is established. Whether this delivers faster or fuller recovery in practice will depend on the drafting of the power and on the trustee’s capacity to meet the compensation.
- Lead generation: The proposals would ban unlicensed real-time communication about superannuation, limit the financial-advice anti-hawking exemption to existing client relationships, introduce civil penalties for anti-hawking breaches, and enhance consent requirements, with further targeted consultation on data harvesting and broking. Targeted exemptions are proposed to protect advocacy, educational and employment communications. Platform trustees and AFS licensees should note the April paper’s proposals for downstream licensee accountability through a reasonable-steps duty, record-keeping obligations, and ongoing due diligence and oversight requirements in respect of lead generators.
The proposals to impose obligations on super trustees to notify the regulator of high risk switching activities has not been pursued. Instead, the Government proposes to strengthen data sharing between ASIC and the ATO. In effect, the ATO (and not trustees) would become the source of information for ASIC to identify concerning patterns of rollover activity.
DBFO reforms
The Government has re-committed to introducing the DBFO reforms. It stated that it will proceed with the new class of adviser, with proposed safeguards prohibiting commissions, bonuses and volume-based payments. The regime would be limited in the first instance to APRA-regulated superannuation funds and life insurers. Banks could not access this regime.
The scope of the regime is to be reviewed three years after commencement. The potential for banks to be able to use the new class of adviser regime would only be considered at that time.
The Government stated that, if the reforms are enacted, super funds would be permitted to provide targeted superannuation prompts, collective charging for an expanded range of intra-fund advice topics and streamlined statements of advice.
Financial advisers should also expect to see a review of the Adviser Code of Ethics and a targeted reforms to the best interests duty for scaled advice.
No further detail or timing was provided.
Managed Investment Scheme Reforms
The Government’s response to the February 2026 Enhancing oversight and governance of managed investment schemes consultation is comparatively light touch. The measures the Government has said it will adopt are:
- empowering the Auditing and Assurance Standards Board (soon to become External Reporting Australia) to set mandatory audit and assurance standards for compliance-plan auditors;
- requiring MIS operators to notify ASIC when they freeze, suspend or otherwise restrict redemptions; and
- further consultation on options to improve MIS-sector data collection by ASIC.
Significantly, the Government has indicated it is not currently pursuing several of the more interventionist proposals canvassed in February, including the prohibition on related-party transactions (with limited exceptions), the requirement for a majority of external directors on responsible entity boards, and changes to compliance-plan content and liability. The response as announced is therefore materially narrower than the consultation paper’s full ambit, although these issues could be revisited.
Responsible entities and AFS licensees operating MISs should nonetheless note that the proposed mandatory ASIC redemption notification would be operationally significant. If enacted, it would require responsible entities to maintain robust internal escalation frameworks and governance controls to identify and report freezes, suspensions or restrictions promptly. It would also give ASIC earlier visibility of emerging liquidity stress and may accelerate regulatory engagement once a notification is triggered.
APRA investment-governance consultation
APRA has said it will consult next month on proposals to strengthen investment governance across eight areas of the lifecycle, including capability commensurate with menu complexity, onboarding/monitoring/offboarding, material conflicts, member-level diversification, and trustee oversight and accountability. While the proposals would apply to all trustees, the impact would be greatest for platform trustees given broader menus, more complex products and the larger role played by advisers in investment selection. The proposals respond to APRA’s 2025 review covering approximately 95% of platform assets under management; APRA has already directed urgent uplifts and taken enforcement action against five trustees.
Next steps
Affected licensees should begin planning, but with no draft legislation available it is too early to take implementation steps. Immediate priorities could include:
- considering the implications for business plans, project schedules and sequencing, and resourcing needs;
- engaging in the consultation processes;
- identifying higher-risk investment options;
- reviewing and stress-testing advice fee deduction cap controls against the ASIC Report 833 benchmarks;
- reviewing remediation frameworks; and
- for MIS operators, establishing escalation and reporting protocols for redemption restrictions.
We will monitor the progress of any legislation and APRA’s forthcoming consultation closely and provide further guidance as the detailed design of these proposals becomes clear.
Want a reminder of the Shield and First Guardian failures, and the regulatory and governance developments shaping investment platforms? Listen to Nathan Hodge and Stephen Jaggers on the FS Reg Room podcast here.
