While the Federal Government mulls over a package of reforms to strengthen protections for Australians’ super in the wake of the collapses of Shield and First Guardian, a recent ASIC review of advice fees and a blow out on the Compensation Scheme of Last Resort (CSLR,) are yet more evidence of the need for those protections to be comprehensive – tinkering around the edges just won’t do.
ASIC’s scathing report was informed by lessons from those collapses, in which almost 12,000 Australians lost more than $1 billion of their life savings on two schemes listed on four super platforms.
It found “stark and persistent failures” by some super platforms to protect Australians super from advice fee erosion. It said one platform trustee proposed an advice fee cap as high as $30,000.
The regulator saw lapses in oversight including limited checks on advice documents, weak controls on advice fee deductions, and “inadequate monitoring” of key risk indicators such as member churn and unusual fund flows.
One case study provided by ASIC, found a super platform trustee performed just 21 risk-based checks of advice fees in almost 18 months, with an adverse finding rate of 75%.
This follows recent analysis by SMC showing that a sudden $1.1 billion surge over the last two years in the total advice fees deducted from Australians’ super accounts, aligns with a sharp spike in recent super switching.
Total advice fees deducted from Australians’ super accounts have spiked in the last two years and just five super platforms accounted for $815 million of the $1.1 billion fee surge between 2023 and 2025.
The growth in advice fees nearly tripled in pace over this period, highlighting an urgent need for stronger consumer protections including more universally robust trustee oversights, clearer fee transparency, and global advice fee caps to ensure fees deducted from Australians’ super are always reasonable and in their best financial interest.
Then last week, we saw the updated estimate for the CSLR levy, showing a rise from $137.5 million to $198.1 million, driven largely by continuing fallout from Dixon Advisory and the first tranche of claims linked to the Shield and First Guardian collapses.
The scale of the new forecast once again highlights the urgency for the Government to legislate its interlocking consumer safety reforms to stop devastating losses like these in the first place.
The reforms must be comprehensive and effective, and get to the heart of the dynamics that continue to drive consumer harm in the super system.
