SMC urges close monitoring of retail funds after Shield, First Guardian
Industry funds body, the Super Members Council (SMC) has cited the collapse of Shield and First Guardian as reasons why the Australian Prudential Regulation Authority should be vigilant in providing a class exemption to retail funds.
The SMC has written to APRA stating that it supports the proposed class exemption for management and company secretaries with small holdings in superannuation funds because it streamlines governance and reduces associated costs, therefore maximising member returns.
However, it said: “in light of recent regulatory action concerning the collapsed schemes Shield and First Guardian, SMC considers that the operation of this exemption may warrant further review at a later stage”.
In doing so it pointed inherent dangers it saw in the structure of retail funds.
“Profit-to-member funds operate under their own unique operating model, where equal representation boards are appointed by employee and employer groups, or members,” it told APRA. “This contrasts with retail funds which are operated as or by for-profit financial institutions, such as banks or investment firms, which manage multiple discrete APRA-registered funds under a single RSE licensee within a corporate group structure.”
It said that while it supported the proposed class exemption, “there is a potential risk that the proposed exemption could interact with existing structural conflicts in parts of the retail sector”.
“Retail funds commonly operate on a for‑profit basis and may have ownership and mandate arrangements with related parties, creating inherent tensions between maximising shareholder returns and delivering optimal outcomes for members,” it said.
“If ownership and control settings are relaxed, there is a risk of incremental increases in undue influence over RSE licensees, which could compound these existing conflicts over time.”
It acknowledged that proposed exemption narrowly targeted at management employees and company secretaries with direct holdings below 2% was unlikely to materially increase member risk but then claimed the need for close monitoring of retail funds.
“In segments of the market already characterised by structural conflicts and related‑party arrangements, any change that reduces visibility over ownership interests and influence should be accompanied by strong expectations for transparency and ongoing supervisory scrutiny,” the SMC said.
“Close monitoring of how the exemption operates in practice will be important to ensure that it does not, in aggregate, weaken protections for members or dilute the effectiveness of the ownership and control regime.”
Their self interest is disgusting bias and costs Australians and the economy billions. Call them what they are, Labor lobby groups.
Remind us again of the ASIC fines paid by profit to member funds in 2025.
Once again in my opinion and another example of appalling and opportunistic behaviour by the SMC.
I think that it is well time for a Royal Commission into the relationships between legislators, unions and super trustees.
Let’s see what’s under the bonnet.