The Minister for Financial Services, Dr Daniel Mulino, used a National Press Club address to announce a sweeping package of consumer protection measures spanning the superannuation system. As part of this announcement we have seen the Treasury release a fact sheet, Protecting Consumers and the Promise of Superannuation in an Evolving Financial Ecosystem, which explores new protections for the SMSF sector (amongst other items).
Why SMSFs are in the frame
The government has been explicit about what’s driving this: the Shield and First Guardian Master Fund collapses, which between them hit close to 12,000 people and roughly $1 billion in retirement savings, plus a pattern of SMSF losses that’s put strain on the Compensation Scheme of Last Resort (‘CSLR’). Treasury’s own framing is that “poor conduct at one point in the chain can be amplified as consumers move between lead generators, advisers, trustees, investment products.” Translated: the harm didn’t originate inside well-run SMSFs, but the sector is downstream of it.
It’s also worth naming what didn’t make the final package. Some pockets of the super sector were using the moment to push hard for a minimum balance threshold on SMSFs, pointing to small-balance rollovers as evidence of consumer harm. Through the consultation, the SMSF sector put evidence to the test and largely debunked the case for a blunt minimum balance floor — and the government has, importantly, not proceeded with one. That’s a genuine win worth banking. But it hasn’t walked away empty-handed either: instead of a floor on the way in, it’s put a series of hurdles at the door.
Mandatory trustee education — finally
The single biggest change in this package is the future role of trustee education, mandating it before registration of a new SMSF. This isn’t a new idea — it’s been raised in the past, and the sector has broadly supported some form of it for almost as long. What’s changed is that it’s now actually going to happen, and it changes the onboarding landscape for every practice that establishes SMSFs.
The obvious question is the delivery mechanism, and the ATO’s existing SMSF education content is the natural foundation to build on rather than something built from scratch. Expect the ATO’s course to become a genuine gate in the establishment workflow, not just a resource trustees might stumble across. It will be a step that will have to be completed and evidenced before the Regulator will register the fund as a complying SMSF.
For practices, that means new trustee education stops being something you point clients toward and becomes something you actively manage as part of onboarding, with the ATO’s course as the likely default pathway. Firms that build this into their process now, rather than treating it as a box to tick later, will handle the transition far more smoothly than those who wait for the detail to land.
More friction at the door, less friction on balances
The rest of the establishment-stage changes read as the alternative the government chose instead of a minimum balance. The ATO gets the power to block rollovers into new SMSFs it’s already investigating for fraud, financial abuse or misconduct – a pre-emptive gate at the point of establishment rather than a penalty after the damage is done, and one that will land squarely on the advisers and accountants doing the setup work. SMSFs will need uniquely identifiable bank accounts, and a genuine written investment strategy in place from day one rather than a template document produced for the auditor, sometime well after the fact.
None of these individually stop a well-run small fund from existing. Together, they’re the compromise: no blanket floor on balance, but real friction on the process, aimed at the funds that shouldn’t have been set up at all rather than the ones that are simply modest in size.
The visibility trade
There’s a data play buried in here too. The ATO will be collecting more information on the advisers and other entities involved in both the establishment process and ongoing advice-fee deduction arrangements. If you’re setting up funds or have advice fees flowing out of a member’s account, expect more of that activity to be visible to the regulator than it has been.
To its credit, the visibility runs both ways. The ATO has also been tasked with giving SMSF trustees, particularly those with low balances real comparison data on how their fund’s returns stack up against APRA-regulated funds. That’s a fair test the sector should welcome rather than resist; it’s also the more evidence-based way to deal with the small-balance concern than a hard floor ever was.
Paying for the safety net
Two cost items to flag with SMSF clients now, well before they show up as a surprise.
- The SMSF supervisory levy is rising from $259 to $295 – the first increase since 2013; explicitly to help fund these consumer protection measures.
- SMSFs are being brought in as Tier 3 levy payers in the CSLR’s waterfall model, scaled to assets under management with a flat levy floor, for future years when a special levy is triggered.
Individually neither is dramatic. Together they’re the sector being asked to help fund a compensation scheme it increasingly draws on – not something we really wanted, but from where the discussion with Government started the outcome is palatable. When appropriate, this additional levy would be expected as a separate line item within the SMSF Annual Return for payment.
What to actually do with this
None of it is legislation yet. Treasury is explicit that consultation continues before anything goes to Parliament, and some elements, including SMSF investment strategy quality standards are among them, are still open questions. There’s no compliance deadline to react to this week.
But there’s no reason to wait for the exposure draft, because the direction isn’t in doubt, and the minimum balance fight showed the sector can shape the detail if it engages early rather than late.
If you’re establishing SMSFs, start treating trustee education as a mandatory onboarding step now, work out how the ATO’s course fits your process, tighten up bank account structuring, and build a genuine investment strategy into the establishment file rather than the audit file. Practices that get ahead of it will barely feel the change when it’s formalised. Everyone else will be retrofitting it under a deadline.
We will be tracking the consultation closely and naturally will be flagging anything material as it develops – particularly how trustee education is actually delivered and evidenced, and the detail of the Tier 3 CSLR levy, both of which will shape how much this actually costs the sector in time and dollars.
