The Super Members Council (SMC) has urged the federal government to overhaul consumer protections across parts of the superannuation system it believes are vulnerable to weak oversight, following the collapses of Shield and First Guardian.
In a submission to the Treasury, the council argued governance, accountability and consumer safety obligations applying to platforms and SMSFs should be brought into line with standards already imposed on APRA-regulated super funds.
The push comes after almost 12,000 Australians lost more than $1 billion through the two failed investment schemes, which the council said exposed significant regulatory weaknesses and consumer protection gaps.
Super Members Council chief executive Misha Schubert said stronger safeguards were urgently needed to restore confidence and reduce the risk of future failures.
“Right now, safety gaps in some parts of the super system are being exploited, putting Australians at serious risk of losing the money they’ve worked hard their whole lives to save for retirement,” Schubert said.
“We urgently need to level the playing field and lift protections and accountability in the parts of the system where they are weakest, bringing them up to the same high level as the strong safeguards that apply in mainstream super funds – so that every Australian can have confidence their super is safe, protected and working hard in their best interests.”
The industry body warned aggressive lead generation campaigns, conflicted remuneration arrangements and high-pressure sales tactics had enabled Australians to be funnelled out of regulated super products and into higher-risk investments.
Under its proposed reforms, the council called for stronger governance obligations on platforms, mandatory due diligence requirements, tighter controls on advice fee deductions and restrictions on conflicted payments tied to product access.
It also advocated for mandatory warnings and knowledge checks for SMSF trustees, alongside stronger regulatory visibility over switching activity and fund flows.
The submission also linked delays to the Delivering Better Financial Outcomes reforms with growing consumer vulnerability, arguing limited access to affordable advice was leaving Australians more exposed to predatory conduct.
According to APRA data cited by the council, advice fee deductions from super rose from $1.464 billion in 2020 to $2.975 billion in 2025, with a sharp increase over the past two years concentrated in platform channels.
The submission also referenced ASIC Report 781, which warned of “inappropriate balance erosion” and identified weaknesses in trustee oversight processes tied to advice fee charging arrangements.
Schubert said passing the DBFO reforms would help close the affordable advice gap and strengthen consumer protections.
“Millions of low- and middle-income Australians also urgently need the promised DBFO reforms to become law to unlock access to safe, affordable guidance and advice from their own trusted super funds,” she said.
“They are a key consumer protection measure in their own right that will help protect Australians from predatory social media ads and high-pressure sales.”
