Super Reforms in Focus: Treasury Targets Platform Trustees with Directors Put on Notice

What you need to know

• On 8 April 2026, Treasury released consultation papers proposing reforms to enhance superannuation member protections following the Shield Master Fund and First Guardian Master Fund collapses, which affected over 11,000 consumers and more than $1 billion in superannuation funds.
• Key proposals for superannuation funds include: strengthening governance for "Platform Trustees" (including codified due diligence and mandatory holding limits); increasing Superannuation Industry (Supervision) Act 1993 (SIS Act) penalties; introducing mandatory waiting periods for inter-fund switches; limiting advice fee deductions for switching advice; and requiring "Platform Trustees" to compensate members for 'eligible losses' from fraud or theft.

What you need to do

• Check if you're impacted: assess whether you would be captured by the proposed definitions of "Platform Trustee" and "Platform Product".
• Review governance frameworks: existing investment onboarding, ongoing monitoring and conflicts management processes should be assessed against Treasury's proposed standards.
• Conflicted arrangements: audit existing commercial relationships with product issuers, including any payments or benefits linked to product listing, continued platform availability, or volume incentives, and map against Treasury's proposed conflicted remuneration restrictions.
• 'Trustees-for hire': assess if a prohibition or strict conditions on 'trustee-for-hire' would fundamentally restructure your operating model.
• Financial impact of proposed compensation model: compensating members for eligible losses from trustee capital is likely to have material financial implications to your bottom line.
• Advice fee deductions: consider the compliance and financial implications of enhanced obligations to review advice fee deductions following an inter-fund switch, including proposed onboarding and monitoring requirements for advisers accessing fee deduction arrangements.
• Directors take note: existing duties under the SIS Act and Corporations Act require directors of corporate trustees to do more than rubber-stamp management decisions.

On 8 April 2026, Treasury released three consultation papers proposing broad cross-sector reforms addressing (a) the sustainability and structural reform of the Compensation Scheme of Last Resort (CSLR), (b) curbing harmful lead generation activity in financial services, and (c) enhancing member protections in the superannuation system.

This article focuses on the third of those papers, which puts forward five key proposals:

• strengthening governance requirements for "Platform Trustees" (a defined term proposed in the paper itself), including mandatory holding limits and codified due diligence obligations;
• increasing penalties under the SIS Act;
• introducing a mandatory waiting period for inter-fund superannuation switches;
• limiting advice fee deductions from superannuation accounts for switching-related financial advice; and
• requiring "Platform Trustees" to compensate members for 'eligible losses'.

How did we get here?

Treasury's consultation papers follow the collapses of the Shield Master and First Guardian Master Funds, which impacted over 11,000 consumers and more than $1 billion of superannuation funds, and respond to the alleged misconduct surrounding those failures.

Treasury's consultation paper noted that ASIC has made enforcement action arising from those collapses a "dedicated enforcement priority", with 26 separate investigations and 12 cases commenced against 21 defendants to date. Those figures included civil penalty proceedings brought against Equity Trustees alleging failures in due diligence concerning the Shield Master Fund which were announced on 26 August 2025.

Not included in the consultation paper is ASIC's announcement on 21 May 2026, that it has commenced civil penalty proceedings against Equity Trustees alleging failures in care, skill and diligence concerning their decision to allow members to invest in First Guardian.

Speaking at the 2026 Superannuation Lawyers Conference on 26 March 2026 prior to the release of the Treasury consultation papers, ASIC Commissioner Alan Kirkland identified five lessons that trustees should heed:

• Substantive due diligence: It is not sufficient to have an approval process on paper for platform-based investment products. What matters is whether the trustee obtained, assessed and acted on sufficient information to understand properly the product and its associated risks.
• Ongoing monitoring: Trustees need monitoring frameworks that are dynamic and operational, with meaningful triggers for review, escalation and intervention.
• Member choice does not displace trustee responsibility: Product risk does not become somebody else's problem because advice was given or the member selected it.
• Importance of systems and controls: Trustees must be capable of giving effect to the governance settings they have adopted.
• Evidence of the Trustee's basis for satisfaction: Trustees should be able to show what information was obtained, what risks were identified, what conditions were imposed, what monitoring occurred, and why the trustee remained satisfied that the investment products and options should continue to be available to members.

It is in the context of these comments that Treasury's proposed changes arise.

We have also observed industry-led change, including the release of a new industry standard by the Financial Services Council (FSC) "demonstrat[ing] the industry’s commitment to act proactively to address the Government’s concerns". The standard applies due diligence expectations, addresses holding limits and the ongoing monitoring of investment options (among other things). It seeks to "strengthen investment and adviser governance practices across superannuation platforms, enhancing consumer protections and providing greater consistency across the platform sector" and is due to commence from 1 July 2026, with a 6-month transition period before full compliance is required by FSC members by 1 January 2027.

What has been proposed by Treasury?

A threshold issue addressed in the paper is the definition of "Platform Trustee", a term which is not defined in the SIS Act. For the purposes of the paper, a "Platform Product" is a superannuation product that allows members to construct their own portfolio by selecting from a wide menu of individual investment options, rather than simply choosing between pre-mixed trustee-directed options based on overall risk profile or ethical or ESG preference (e.g. high-growth, sustainable). A "Platform Trustee" is a Registrable Superannuation Entity (RSE) licensee that acts as trustee of a superannuation entity offering one or more Platform Products. The paper contemplates that the definition could be further refined by additional criteria such as the number, type or risk profile of investment options offered.

These types of trustees have received particular focus in the paper because the majority of losses in the Shield and First Guardian collapses involved members who accessed the failed products via superannuation platforms. Members of those platforms are typically more exposed to a broader range of member-directed investment options, including options that are more complex, less diversified and which introduce additional governance risks compared with pre-mixed trustee-directed options.

An impetus for superannuation regulatory enforcement

If implemented, these proposals are a significant shift in the regulatory landscape for superannuation funds.

The consultation paper outlines that the 'stick' for enforcing misconduct under the SIS Act has been insufficient to deter industry participants and the increased penalties would "uplift governance standards and clarify expectations". The proposed changes recognise the importance of "strengthening penalties to support broader proposed reforms to uplift trustee governance and accountability".

The growing pool of superannuation assets ($4,485.5 billion as at 31 December 2025) also warrants reconsideration of SIS Act penalties to achieve effective deterrence against trustee misconduct, including in the aftermath of the Shield and First Guardian collapses.

The superannuation sector is facing an evolving regulatory framework with increased scrutiny of trustees to ensure they comply with their duties and obligations (under the SIS Act covenants, prudential standards such as SPS 530 Investment Governance and the proposed reforms). Trustees should heed these early warning signs and ensure they are prepared for heightened regulatory activities in terms of investigations (under the SIS Act and the FAR Act) and subsequent enforcement actions that may result in the imposition of significant civil penalties.

Directors' duties – scrutiny not silence

Despite the proposed legislative reform, the Shield and First Guardian collapses are not the first time Australia’s superannuation system has been tested by fraud. The collapse of the Trio Capital group in 2009 resulted in over $176 million in losses of superannuation funds into offshore accounts through a coordinated criminal scheme and offers instructive parallels.

Directors of superannuation corporate trustees are subject to the covenants in section 52A of the SIS Act and the duties in sections 180 to 184 of the Corporations Act. These are not new obligations, but they bear repeating: a director’s role is not to rubber-stamp management decisions, but to interrogate, challenge and question when things do not look right.

Investment returns that look “too good to be true” demand scrutiny – as was the case in both Trio and the Shield and First Guardian collapses. If management cannot credibly explain how performance is being achieved, that is a red flag and one that requires action, not passive acceptance or acquiescence. In practice, for example, this means scrutinising board papers, documenting your questions and concerns, and ensuring the trustee has a capable and well-resourced company secretary to support the board. If disagreement arises, ensure it is recorded in the minutes. If the board will not act on legitimate concerns, consider your position carefully including whether resignation might be the next best step.

The fallout from Shield and First Guardian is likely to result in increasing demands on directors for compliance with their duties and renewed scrutiny of their conduct. While the proposed legislative reforms will strengthen the regulatory framework, the existing duties under section 52A of the SIS Act and sections 180 to 184 of the Corporations Act already impose significant obligations on directors. ASIC has signalled its willingness to pursue individuals, and the courts have shown they will hold directors accountable for failures of oversight.

For boards and their directors in the superannuation space, the message is clear: understand what you are approving, ask the hard questions, and do not assume that management has everything under control.