Finance sector consumer protection, stability, confidence key to productivity

As the superannuation and financial services sectors play a crucial role in investment and productivity, the government has pledged to enhance consumer protections, stability, and confidence within these areas.

According to Assistant Treasurer and Minister for Financial Services, Daniel Mulino, the motivation for reform was highlighted by the alleged practices employed in the cases of the Shield and First Guardian Master Funds.

Mulino said this included high-pressure lead generation, pushing people to switch their retirement savings into high-risk environments and products such as low-quality managed investment schemes.

“We need to ensure consumers continue to have trust in the superannuation system to help them provide for their own retirement,” he said.

“We are considering target reforms to deal with these issues across the whole ecosystem and will consult on these early in 2026. We want to ensure consumers can be properly informed before making the decision to switch what are now large sums of superannuation savings, and more protected when they switch.”

Mulino warned that with increased pressure on the Compensation Scheme of Last Resort (CSLR), financial collapses could have a significant impact on the industry and switching to a better-performing super fund could improve the outcomes for Australians.

However, it was noted that if moving to a different super fund, the decision needed to be made with careful consideration, yet the government would ensure the CSLR was there to support people if they needed it.

For the financial year of 2025–26, a special levy of $47.3 million would apply to fund the increased call on the CSLR.

Mulino said this would be applied broadly to reduce the burden on any one subsector and to ensure the sustainability of individual subsectors and the CSLR as a whole.

It was also revealed that the government would look to release an options paper on post-implementation reform of the CSLR to address potential structural and technical changes to the scheme itself to ensure it remained sustainable.

“Building trust in the financial system will support the government’s productivity agenda. Defective schemes attract funds that should otherwise support innovation and economic growth,” Mulino said.

“And when financial schemes collapse, investor confidence diminishes alongside. Australians become more cautious about investing and this can tarnish even legitimate, well-regulated products.”

“This work will maintain confidence in the Australian financial system, paying dividends for consumers and the economy as well as delivering a stronger superannuation system so Australians can have a dignified retirement.”