Don’t handicap outsourced trustees – Equity Trustees

Mike Taylor

Managing Editor and Publisher

29 May 2026

Equity Trustees (EQT) has mounted a strong defence of the outsourced trustee model urging the Government against imposing measures which would constrain their activity in the superannuation market.

In its submission to Treasury EQT, which is currently the subject of ASIC litigaiton, has pointed to the fast-growing nature of the model, noting that it represents around $1.8 trillion in superannuation assets when the aligned self-managed superannuation funds (SMSF) market is taken into account.

“The professional independent trustee model has been the fastest-growing segment of the superannuation market in the last 10 years and has been responsible for material innovation in the industry,” it said.

“The market has grown from around $10 billion to $150 billion in ten years,” the submission said. “The model currently looks after the interests of 900,000 members.”

“The model has a solid record of delivering to members and not suffering from systemic failures that have been prevalent in the vertically integrated in-house models – both commercial models and not-for-profit models.”

“There is no sound basis for banning the professional independent trustee model,” the EQT submission said.

It went on to state that all trustees have the same responsibility for delivery on members best financial interests and, on this basis, all trustees should have the same capital requirements,” it said.

“If trustees are to meet eligible fraud costs (the opposite of the objective of Part 23 of the SIS Act), fraud needs to be carefully defined and all trustee should be treated in exactly the same manner to avoid the illogicality of the same fraud causing loss to two superannuation funds, yet only the platform being required to make the fraud good,” EQT said.

“It also entrenches the moral hazard that other ASIC licensed entities are effectively utilising the superannuation as protection of last resort.”

Elsewhere in its submission, the company said the platform market and SMSF market should be considered as one market in that they both provide individualised retirement investment programs, individualised taxation arrangements and the non-comingling of assets.

It said it was unfortunate that it had taken a material incident such as the Shield and First Guardian Master Fund collapses for regulators to turn their mind to standards of regulation for the platform market.

“It is clear that the superannuation market is constantly evolving,” it said. “As industry funds evolve their product offers from a simple choice of around 5 balanced funds of different risk/return profiles, to a wider choice to more appropriately meet the needs of members in retirement (as platforms and SMSFs are already designed), there will be little differentiation between offers.

“Most major industry funds are already offering the stocks in the ASX200 and ASX300, a range of bonds, term deposits and indexed and active ETFs, which are listed forms of open-ended managed investment schemes (an increasingly favoured form of investment vehicle for the whole funds management market).

“It is not clear there is any utility in creating fundamentally different rules in relation to investment governance, switching, capital requirements and treatment of fraud, based on whether a fund offers a greater or lesser level of choice of investment options,” EQT’s submission said.

“Any differentiation of fund offers that may stand on some broadly reasonable basis today, will not stand that way in the future, as industry funds develop their Retirement Income Covenant strategies and move past simple cohort analysis and increasingly towards providing individualised investment programs per member.”