Mulino hits SMSFs with new levy in major financial sector reform

“But a safer system must protect consumers across the entire superannuation system. Over $100 million was invested into Shield and First Guardian through self-managed super funds, and SMSF losses have already placed immense strain on the CSLR [Compensation Scheme of Last Resort], accounting for more than 90 per cent of costs to date.”

Mulino said in a statement that the collapses of the Shield and First Guardian Master Funds exposed “profound risks and vulnerabilities” in parts of the financial system, which impacted almost 12,000 people and around $1 billion in retirement savings.

“Broader losses within the Self‑Managed Superannuation System, which have placed significant strain on the Compensation Scheme of Last Resort, have also highlighted the poor member outcomes which arise from insufficient consumer protection,” he said.

As such, Mulino revealed new changes that will impact the SMSF sector, including an increase in the levy for the first time since 2013.

“We will also align the first SMSF ATO supervisory levy with fund establishment and increase the levy for the first time since 2013, to help ensure the ATO is appropriately resourced to engage with new trustees, identify emerging risks, and intervene when members may be at risk of financial harm,” Mulino said.

“And we are going to improve transparency around SMSF outcomes by requiring newly established SMSFs to disclose any financial adviser involved in their establishment, and by adding a dedicated line item to SMSF annual statements identifying advice fees during the year. Importantly, these reforms are targeted at preventing harm, not creating red tape for Australians who choose to manage their retirement through an SMSF.

“For the vast majority of trustees, they reflect practices already in place, allowing us to better identify at-risk consumers and interrupt harmful practices.”

Furthermore, Mulino announced that the government will give the ATO a new power to prevent rollovers into SMSFs “where there is a well-founded suspicion of consumer harm”.

“We will strengthen data sharing between ASIC and the ATO so concerning patterns of rollover activity can be identified earlier,” Mulino said.

In addition, Mulino said SMSFs will be required to maintain uniquely identifiable bank accounts to help identify fraud risks. The government will introduce basic trustee knowledge requirements to ensure trustees understand their obligations before taking direct responsibility for their retirement savings, he added.

Application of the waterfall model

Mulino also announced that the Compensation of Last Resort (CSLR) scheme will be limited to investment losses rather than hypothetical losses for applications made to AFCA after 30 June next year.

He said that the 2026–27 government will apply the waterfall model outlined in consultation to the $170.3 million special levy attributed to the financial advice subsector. However, he noted that applying the waterfall model does not mean that subsectors are automatically going to pay the maximum cap.

“We recognise the significant impacts that these levies have across the financial system. They recognise that consumers need access to a compensation framework that is fair, effective, and reliable,” Mulino said.

Earlier this year, a series of co-ordinated submissions to Treasury consultations on financial system integrity by CA ANZ, CPA Australia, and the IPA called for more effective, upstream conduct and responses that target the root cause of governance failures. In their submission, they urged the government not to introduce the waterfall-level model, saying it risks normalising funding shortfalls or burdening financial businesses from numerous sectors.

Mulino said in his address that the government will ensure that SMSFs contribute to special levies in future years where a special levy is required.

Calling this a “balanced approach”, he said it is estimated that individual SMSFs are likely to contribute no more than $20 per leviable period, “with an overall sector levy scaled according to the relative size of the SMSF population assets compared to APRA regulated sector assets”.

“Alternative models, including excluding SMSFs from the scheme altogether, would have created significant gaps in consumer protection while adding complexity and administrative costs,” Mulino said.