Assistant Treasurer and Minister for Financial Services Daniel Mulino recently addressed the National Press Club in Canberra, using the appearance to announce a raft of changes to the superannuation system. While the entire super industry was included in these measures, a few of them related to SMSFs specifically.
The reasoning behind these amendments was to improve consumer protection mechanisms in the wake of the Shield and First Guardian master fund collapses. However, some of them raise more questions than answers.
In all, seven initiatives regarding SMSFs were proposed, two of which really warrant closer scrutiny.
Firstly, Canberra wants to grant the ATO power to prevent rollovers to new SMSFs in situations where the regulator is investigating concerns of fraud, financial abuse, misconduct or potential harm.
Of course, we don’t have any details yet as to how this will work, but just looking at this proposal has alarm bells ringing already. It is unclear as to how the regulator will determine situations where it suspects elements of fraud, financial abuse, misconduct or potential harm are present.
Hopefully this will measure will not rely on industry or retail funds alerting the ATO to potentially dodgy circumstances. Again, as a cynic, I think this would be disastrous if industry funds in particular are allowed to play a part in preventing benefits from being transferred from its stewardship over to an SMSF.
We all know leakage from public offer funds to SMSFs tends to involve members either approaching retirement or in retirement and that means those with the highest balances. Naturally the industry funds would be keen to stop significant outflows from their assets under management and would, of course, do anything in their power to stop it happening.
And so we have to ask: would this measure be misused in the name of self-interest to protect a super fund’s pool of member money from shrinking?
The SMSF Association noted in its response to this proposal that the “ATO already has the power to decline registration if the trustee does not meet the registration eligibility or there are factors that indicate the SMSF applicant is not fit and proper to be a trustee”. This observation does suggest giving the regulator the new powers being mooted is in fact superfluous.
So if it is in fact redundant, why open the door for opponents of the SMSF sector to exert any influence over it? You could rightly ask if this is another example of unnecessary government overreach to favour industry funds.
The second proposal worthy of additional examination is where the government wants to impose introducing mandatory trustee education prior to SMSF registration and would support industry-led initiatives to uplift standards across the sector.
It is difficult to make an assessment of this suggestion without knowing what the mode of education looks like. The SMSF Association said it is concerned a “cookie-cutter” approach will be applied, which may not be fit for purpose as it would be difficult to understand how a one-size-fits-all model would really work.
Naturally, I think government support of stakeholder initiatives to improve education standards across the space is a good idea as that is a goal smstrusteenews is already looking to achieve.
I firmly believe the better informed SMSF trustees are, the better decisions they will make when running their own super fund.
A further element to watch out for is whether Capital Hill will go to the extent of imposing formal education standards on existing trustees. That notion has been discussed and attracted much speculation over the past couple of decades, and we can only wait to see if the mandated education required before establishment is extended in principle over the coming years.
As usual it is a bit of a wait-and-see proposition, but these are possibilities worth monitoring from this point onwards.
The latest sector developments, such as those discussed above, will be covered during SMSF Trustee Empowerment Day 2026. This is a must-attend event for existing and potential trustees. To register, please click here.