APRA warns super trustees adviser input doesn’t remove obligations

APRA has warned retail super trustees that financial adviser involvement in recommending platform products does not diminish their obligations, as regulators turned the spotlight on the Shield Master Fund and First Guardian Master Fund during a meeting with fund CEOs.

In a note released on Thursday, APRA and ASIC summarised discussions from their August roundtable with executives, which revealed that the two controversial funds “featured prominently”.

“In opening, APRA raised concerns regarding the Shield Master Fund and First Guardian Master Fund matters, noting that the result of these products being available through some superannuation platforms could weaken confidence in the superannuation system,” the regulators said in a joint statement.

APRA told trustees they “must work collaboratively as far as possible” and act “appropriately” when considering how to improve practices to prevent future harm to members.

It added: “APRA reminded trustees that the involvement of financial advisers in recommending platform choice products to members does not absolve trustees from their obligations under s52 of the SIS Act and from compliance with APRA’s prudential requirements.”

Funds present included Netwealth and Equity Trustees – both of which had hosted First Guardian on their platforms. Equity Trustees has since become the first trustee to face ASIC legal action.

The session also canvassed how trustees could share intelligence on high-risk structures and adviser behaviour, and sharpen oversight of advice fees deducted from member accounts.

“ASIC challenged participants to consider what recent actions they had undertaken to improve monitoring of advice fee deductions, and whether there are other products on platform menus that may lead to poor outcomes for members,” the statement said.

Other areas of focus included strengthening trustee oversight through structured assessments and data triangulation, tougher due diligence on managed investment scheme boards, and expanded adviser monitoring frameworks.

“Some CEOs described using dashboards, analytics, and geographic mapping to identify anomalies such as mismatched adviser-member locations and disproportionate revenue growth,” the regulators noted.

“Monitoring triggers now include referral patterns, account openings, and unusual behaviours relating to flows at the investment option level, with some platforms conducting file reviews. Participants also committed to supporting members who, for various reasons, may no longer have a financial adviser.”

The discussions come as Treasury consults on mechanisms to fund consumer losses arising from the collapse of funds like Shield and First Guardian.