Enforce existing advice regulation, don’t layer new ones

Mike Taylor

Managing Editor and Publisher

9 June 2026

The Government should not seek to impose further layers of regulation on the financial advice sector as a result of the collapse of Shield and First Guardian but, instead, should require swift enforcement of existing regulations, according to The Advisers Association (TAA).

In its submission to the Treasury consultation paper on enhancing consumer protection in the superannuation system, the TAA said it believed the current focus on adding layers of new prescriptive regulation is misguided and will not improve consumer protection.

TAA chief executive, Neil Macdonald said more rules over the last 20 years had only increased costs for honest operators while failing to address the root cause of most collapses, which is addressing bad actors who are will to ignore or skirt around the rules.

“The best way to strengthen consumer protection is to recognise that superannuation is part of a broader eco-system, and that individual initiatives in isolation will not achieve the massive changes needed to address what are increasingly systemic issues,” he said.

“What is needed is a combination of improving consumers’ financial literacy, the early identification of poor behaviours, swift action by regulators, the effective enforcement of existing regulations on all stakeholders including advisers, licensees, research houses, product providers and trustees, with increased personal accountability for those stakeholders failing to meet their obligations, including related parties and finally sufficient consistent penalties as a deterrent.

“None of these in isolation, will achieve the desired results of improved consumer protection,” Macdonald said in reference to the TAA submission.

“TAA opposes broad, system-wide restrictions that negatively impact compliant providers and financial advisers, such as prohibiting fee deductions for switching-related advice. These measures are too restrictive, would reduce consumer access to affordable professional advice and would not meaningfully reduce harmful switching.

“Instead, the focus must shift to the “better and earlier identification of bad actors and the prompt and effective action against them”.

Macdonald said the TAA’s recommendations centre on uplifting governance and accountability to deter malfeasance:

“Effective Enforcement: When issues like governance failures (as seen with Shield and First Guardian) arise, the problem is often not a lack of process, but that the process was not enforced. TAA supports a codified, but not prescriptive, due diligence requirement for Platform Trustees, but stresses that a lack of monitoring and enforcement of existing obligations is ineffective and needs to be addressed.

“Increased Penalties: TAA supports increasing SIS Act penalties to match those in the Corps Act. SIS penalties of less than $1 million, could be seen as a necessary cost of business, when consumer losses and bad actors’ gains run into the hundreds of millions or more. This also ensures regulatory parity and acts as a sufficient deterrent, incentivising better governance, but only if applied in conjunction with other reforms that clarify expectations and uplift governance standards.”