Government must back reforms that genuinely tackle predatory super practices — and drop those that shift harm onto victims

Super Consumers Australia has called on the Government to focus its response to the Shield and First Guardian collapses on reforms that will actually protect people, warning against ineffective measures and those that will harm victims.

The investment schemes saw more than 11,000 Australians invest over $1 billion into high-risk and inappropriate products, and their collapse caused significant financial harm to people who were just looking to do better for their families in retirement.

“We need reforms that focus on preventing harm before it occurs. Dodgy lead generation sales practices allowed the harm to spread at an industrial scale. Disrupting this business model should be the highest priority. The most effective way to do that is to target their revenue by banning switching fees being paid from super.” – Super Consumers Australia CEO, Xavier O’Halloran.

“This needs to be coupled with stronger trustee obligations, and requirements for trustees to fund compensation to victims when they fail to protect their members from harm. Consumers expect trustees to act as gatekeepers. Creating incentives for them to do their job will support a safer system.”

Super Consumers Australia is also calling on the Government to abandon the option which would see people lose access to compensation. 

“The proposal to remove the ‘but for test’ is deeply unfair and undermines a basic tenet that people should be compensated for losses that flow from misconduct. The right way to address sustainability is to stop harm from occurring in the first place and make it easier to ensure those responsible pay. Cutting off compensation to victims who have seen their retirement savings destroyed is a counter productive policy outcome,” said Mr O’Halloran.

While welcoming the breadth of proposals, Super Consumers cautioned that not all measures will deliver the same level of protection.

“We’ll engage constructively through the consultation, but it’s important to be clear some of these proposals will make a real difference, and some risk taking us backwards,” Mr O’Halloran said.

“This is a critical opportunity to reset the system. Getting this right means shutting down predatory practices for good and rebuilding trust in super for millions of Australians.”