The Financial Services Council (FSC) has released a new industry standard aimed at lifting investment and adviser governance across superannuation wrap platforms, as scrutiny intensifies following the Shield and First Guardian collapses.
The new Wrap Superannuation Platform Trustee Investment and Adviser Governance Principles: Standard and Better Practice Guidance is designed to strengthen due diligence, ongoing monitoring of investment options, and oversight of financial advisers using platforms.
According to the FSC, the standard is intended to improve consumer protections and create greater consistency across the platform sector.
FSC platform members account for an estimated 89 per cent of total platform funds under management (FUM) and include the seven largest wrap platforms by market share.
The release lands as the federal government consults on reforms to platform investment governance, compensation and distribution practices, with Financial Services Minister Daniel Mulino recently issuing policy options in those areas.
The council said its standard was developed as an industry-led response within the existing legislative and regulatory framework and is intended to complement potential regulatory change.
FSC chief executive Blake Briggs commented: “Consumers should have confidence that superannuation platform trustees are applying scrutiny to each investment option that they offer on their menus while still preserving the flexibility and choice that members value.
“This Standard reflects the industry stepping up. We are not waiting for legislative change but are acting now to uplift practices under existing laws.”
The standard strengthens expectations around initial due diligence of investment options, requiring trustees to assess product issuers and investment managers on factors including track record, governance, conflicts management and disclosure, according to the council.
The standard also calls on trustees to consider holding limits on investment options to manage concentration, liquidity and valuation risks.
Under the framework, trustees are expected to conduct regular and trigger-based reviews of investment options where there are material changes in performance, risk or liquidity, with defined escalation pathways when concerns emerge, while sharpening expectations around governance of advice businesses using platforms, including the use of data to identify high-risk adviser behaviour.
The guidance also addresses oversight of advice fee deductions, requiring trustees to implement controls to detect and act against inappropriate fee charging.
For unadvised members, it recommends limiting access to a simpler investment menu and issuing proactive, factual communications.
Briggs said the industry response had been shaped by recent platform failures.
“In the wake of the Shield and First Guardian collapses, the industry has responded to the clear calls by the Minister and regulators for a concerted effort to achieve platform governance uplift.
“Platforms play a critical role in enabling Australians to access a wide range of investment opportunities with the support of financial advice.”
He added that several of the reforms under consultation could materially strengthen the sector, particularly around managed investment scheme governance, surveillance, harmful lead generation and requiring trustees to stand behind their investment governance processes.
The FSC also warned against changes that could unnecessarily reduce consumer choice or limit access to financial advice, arguing that some reform options would be more effective than others in improving consumer protection.
The standard will begin on 1 July 2026, with a six-month transition period before full compliance is required from 1 January 2027.
