Did the ASIC/APRA “twin peaks” model fail?

Mike Taylor

Managing Editor and Publisher

11 June 2026

Nowhere in Treasury’s multi-faceted reviews around the fall-out from the collapse of the Shield and First Guardian funds has there been any hard mentions of the effectiveness of the Australia’s so-called ‘twin peak’ regulators – the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investment Commission (ASIC).

Evidence provided to Senate Estimates has again confirmed the frustration of politicians that while one regulator, ASIC, was actively investigating the two failed Managed Investment Schemes (MISs), APRA was largely oblivious notwithstanding the fact it was actively collecting pertinent data.

The level of political frustration was evident when APRA appeared before Senate Estimates and was questioned by NSW Labor Senator, Deborah O’Neill, who understood but did not accept that the regulator had collected data on Shield and First Guardian evidencing rapidly escalating investment flows yet did not see any “red flags”.

O’Neill suggested that APRA was seeking to “have it both ways” and referenced the fact that the regulator was running a budget surplus.

APRA explained why it did not see any of O’Neill’s “red flags” by noting that “As the prudential regulator, APRA is concerned with the soundness and overall stability of the financial system and therefore looks at the overall entity, not specific member in-flows to individual products (of which there are several thousand unique investment options offered)”.

“APRA regulates superannuation funds through the trustees and therefore does not assess individual investment options or products or monitor liquidity, growth and concentration risk at the product level,” the regulator said.

In other words, APRA didn’t find anything in the data because it did not believe it was its legislative responsibility to do so – something reinforced by comments made by APRA chair, John Lonsdale, during last week’s Senate Estimates hearing.

Nonetheless, responding to a question on notice asked by Senator O’Neill in December, last year, APRA managed to produce a granular analysis of the investment flows into the Shield and First Guardian funds via Diversa, Equity Trustees, Netwealth and Macquarie Investment Management.

Six months later and responding to live questioning from O’Neill during last week’s Senate Estimates hearing, both Lonsdale and his soon-to-depart deputy, Margaret Cole, emphasised that the granular analysis provided to the Senator was not something the regulator would conventionally have prepared.

Indeed, both Lonsdale and Cole noted that in terms of investment fund inflows, the Shield and First Guardian products were not exceptional and actually lower than flows to some other platform-based superannuation products.

They said the data had been collected for the purposes of the superannuation performance test and not for identifying flows into two specific investment products and that APRA was neither legislatively required nor financially resourced to handle matters differently.

As Treasury and the Assistant Treasurer and Minister for Financial Services, Daniel Mulino consider appropriate legislative responses to the collapse of Shield and First Guardian and the impact on the funding of the Compensation Scheme of Last Resort they might equally consider whether the twin peak model remains appropriate.

Perhaps more to the point, Treasury might care to consider whether running two separate regulators across a rapidly consolidating financial services industry is cost-effective.