Mulino unveils crackdown on managed investment schemes

Daniel Mulino spoke at the National Press Club on Wednesday (19 August), where he announced a package of reforms in the financial and superannuation sectors.

The reforms aim to strengthen consumer protections and build the resilience of the sectors, Mulino said.

Mulino announced that the government would enhance governance of managed investment schemes (MISs) by giving the Auditing and Assurance Standards Board (soon to become External Reporting Australia) the power to make mandatory audit and assurance standards for auditors of MIS compliance plans.

On top of this, responsible entities of MISs will be required to notify ASIC when they freeze or limit an investor’s ability to make redemptions.

Mulino also said that as announced in the 2026–27 budget, the government will soon also consult on options to improve data collection on the MIS sector.

According to Mulino, these reforms have come in light of the collapse of Shield and First Guardian Master Funds, which “exposed profound risks and vulnerabilities in parts of the financial system”, and impacted almost 12,000 people and around $1 billion in retirement savings.

“For many people, the losses they have incurred represent most, or even all, of the retirement savings they spent decades building,” Mulino said in his address.

“These events expose vulnerabilities across multiple parts of the financial ecosystem; they involve sophisticated and often predatory lead generation practices, advice arrangements that may have failed the best interest duty, and MISs alleged to have involved mismanagement, conflicted conduct, and potentially fraud.”

In addition to this, Mulino announced reforms to address harmful lead generation practices exposed as a result of the collapse of Shield and First Guardian. He noted that lead generators mostly make contact through social media, an online advertisement, or a cold call.

Following persuasive sales processes, consumers are referred to a financial adviser who makes recommendations and moves the consumer’s savings, he said.

“In many cases, large portions or even all of a person's retirement savings are directed into a small number of products, and sometimes these products are highly risky, not transparent, and not diversified,” Mulino said.

“Those savings can ultimately end up in MISs that collapse, causing devastating losses. These events are not the result of a single failure; they reflect a chain of conduct spanning lead generation, financial advice, MISs involving conflicts of interest, poor governance, and in some cases, allegations of serious misconduct and fraud.”

To tackle harmful lead generation, Mulino said the government will ban unlicensed real-time communication with consumers about superannuation, with targeted exemptions to protect advocacy, educational, and employment communications.

It will also strengthen anti-hawking protections by limiting the existing exemption for financial advisers to existing client relationships.

“We will strengthen penalties for breaches of anti-hawking laws, and the government will also take further steps to target the data collection and broking activities in the financial sector that often represent consumers' first point of contact with these burgeoning ecosystems of harm,” Mulino said.

“These reforms are designed to disrupt some of the most damaging business models operating in the system today. They intervene at the earliest point of consumer harm, reducing opportunities for bad actors to access potential victims.”

Mulino said that alongside the additional funding allocated to ASIC in the budget, the reforms will improve transparency, strengthen accountability, and give regulators more visibility of emerging risks.

“Importantly, they will help regulators identify concerning flows of consumers and capital into high-risk products at a much earlier stage and intervene before problems become widespread consumer harm,” Mulino said.

Commenting on the reforms, the Financial Advice Association Australia said it supports changes that require superannuation fund trustees who are responsible for harm to fully compensate consumers at an earlier age. It said this would decrease compensation claims that flow through to the CSLR and ultimately fall on financial advisers.

“We encourage the government to extend this approach to managed investment schemes as they have historically been at the centre of catastrophic collapses," the association said.

"The stronger governance requirements to be placed on MISs are critical to preventing future problems."

Earlier this year, a series of coordinated submissions to Treasury consultations on financial system integrity by CA ANZ, CPA Australia, and the IPA called for more effective, upstream conduct and responses that target the root cause of governance failures.

In their submission, they recommended ensuring that MISs contribute to funding in proportion to the losses caused, and addressing misconduct within distribution channels.