Welcome to Issue 90 of the FSC Policy Update. This article outlines legislative and regulatory developments in the superannuation, investments, financial advice, tax, technology and innovation sectors, plus more. Learn about what’s impacting the financial services industry.

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PARLIAMENT, LEGISLATION & REGULATION

2026-27 Federal Budget

The centrepiece of the Budget is the Government’s commitment to replace the current 50% Capital Gains Tax (CGT) discount with the old cost base indexation for assets held for more than 12 months, with a 30 per cent minimum tax on net capital gains. These changes will apply to all CGT assets, including pre-1985 CGT assets, held by individuals, trusts and partnerships. Superannuation has been carved out of these changes.

This has been justified by the Government primarily as an intergenerational equity measure in the context of an increasingly unaffordable housing market. The FSC has taken a public position that highlights the important role managed funds play as allocators of capital who are investing in Australia’s economy. The FSC is concerned about any changes that would have the effect of discouraging and disincentivising investment into managed funds and other productive assets that contribute to economic growth and productivity. The FSC has also expressed concern about penalising young Australians as they seek to build wealth through investments outside of superannuation.

Other Budget measures include:

Changes to negative gearing where losses related to existing residential investment properties purchased from 7:30pm AEST 12 May 2026 will only be deductible against other income from residential properties, including capital gains.
Changes to taxable income on discretionary trusts including from 1 July 2028, trustees will pay a minimum tax of 30 per cent on the taxable income of discretionary trusts. Beneficiaries, other than corporate beneficiaries, will receive non-refundable credits for the tax payable by the trustee.
Modest income tax cuts: $250 Working Australians Tax Offset which will begin from the second half of 2027 and be paid each year and an instant tax deduction of up to $1,000 from the 2026–27 income tax year.

Key announcements for the financial services sector include:

$17.8 million over four years from 2026–27 to strengthen governance requirements, supervision and enforcement in relation to managed investment schemes, including $10.3 million for the Australian Securities and Investments Commission (ASIC) to enhance its ability to utilise data in its supervision of the managed investment scheme sector.
$198.1 million over two years from 2026–27 to boost productivity through streamlining regulatory systems and secure access to data, including a commitment to continue cutting red tape for the financial services sector.
$47.5 million over four years from 2026–27 (and $3.9 million per year ongoing) for the Treasury and the Australian Taxation Office (ATO) to strengthen and streamline Australia’s foreign investment framework, including a new performance target to decide all low-risk applications within 30 days from 1 January 202 7, removal of ineffective conditions on existing approvals and reforms to foreign investment laws and the Register of Foreign Ownership of Australian Assets.
A time-limited, targeted concession in the foreign resident CGT regime for investment in the renewables sector. The transitional arrangement will apply to foreign investors disposing of certain renewable energy infrastructure assets from commencement, being the first day of the next quarter after Royal Assent, until 30 June 2030.

The CGT changes raise multiple technical implementation questions around the operation of the tax for FSC member businesses and their consumers. The FSC has commenced a process with its Tax Expert Group and regulatory affairs working groups across superannuation, managed funds and financial advice, to begin compiling questions for Treasury and the ATO, and the FSC will commence formal engagement in the coming weeks. The FSC will seek to contribute to any further policy development detail with Treasury, and the parliamentary process. The CGT changes are expected to be debated and potentially voted on in the Parliament.

Further details can be found in specific policy sections of the Policy Update.

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Financial Adviser registration

The Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Bill 2025 implements the Government’s decision to no longer proceed with Stage 2 of the registration process for financial advisers established by the Better Advice Act (which would have required individual financial advisers to register with ASIC annually from 1 July 2026). The Bill maintains the current system which requires AFS licensees to apply to ASIC to register their authorised financial advisers. This is consistent with the objective of reducing regulatory burden for individual advisers and maintaining a functioning and effective disciplinary system.

The FSC supports this decision as a practical measure to reduce red tape in advice compliance. Following review by the Senate Economics Legislation Committee, which inquired into the Bill in January, the Bill passed unamended on 1 April and has now become law.

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Government passes legislation allowing victims of child sexual abuse to access their offender's superannuation

The Treasury Laws Amendment (The Survivors Law) Bill 2026 has passed the Parliament. This Bill provides reforms to ensure convicted child sexual abusers cannot shield assets in superannuation to avoid paying court ordered compensation to victims and survivors. The legislation allows victim survivors to seek access to an offender’s additional personal and salary sacrifice superannuation contributions where compensation remains unpaid after 12 months and enables the ATO to assist in identifying eligible superannuation balances. The FSC supported the legislation as an important reform to prevent misuse of the superannuation system and improve outcomes for survivors of child sexual abuse.

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Foreign Financial Service Providers (FFSPs)

The FSC has consistently advocated for resolution of the long-running uncertainty surrounding the FFSP regime. Foreign providers have been subject to rolling transitional relief from the requirement to hold an AFS licence since 2003. Two previous Bills seeking to establish a permanent framework were introduced but lapsed upon the calling of general elections—first in 2022 and again in 2025.

In November, the Government introduced a new Bill, which, among other measures, would establish a new AFSL exemption regime for FFSPs. The Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Bill 2026 has now passed both Houses of Parliament and is awaiting Royal Assent. The Bill was referred to the Senate Economics Legislation Committee for inquiry, to which the FSC made a submission.

The new FFSP regime will not commence immediately. In the interim, ASIC has extended its transitional relief until 31 March 2027.

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Ban on superannuation advertising during employee onboarding passes Parliament

On 26 March, the Treasury Laws Amendment (Supporting Choice in Superannuation and Other Measures) Bill 2025 received royal assent.

Schedule 2 of the Act introduced a general ban on advertising superannuation products during employee onboarding. The ban does not apply where the product being promoted is the employee’s stapled fund, the employer’s default fund, or a MySuper product that has not failed the performance test (provided that the employee’s stapled fund is also shown). However, the Act does not require the employee’s stapled fund to be displayed where the onboarding platform only advertises the employer’s default fund. The measure is scheduled to commence from 1 July 2026.

The FSC previously made a submission to the Senate Economics Legislation Committee inquiry into the Bill outlining that, while we support the Bill’s policy intent of reducing duplicate accounts and ensuring employees receive timely and accurate information, the drafting of the Bill risks undermining competitive neutrality at the point of onboarding. Furthermore, aspects of the current framework (such as the ability to advertise the employer’s default fund without also having to display stapled funds) may also operate in a manner that is inconsistent with the stated objective of reducing unintended duplicate accounts.

Following passage of the Bill, Treasury released draft regulations for consultation prescribing the conditions and disclosure requirements that must be met when relying on the exception that permits the advertising of certain MySuper products during employee onboarding. The FSC’s submission was broadly supportive of the draft regulations but reiterated our concerns with the primary legislation. The consultation on the draft regulations closed on 17 April, and there have not been any developments since then.

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ASIC instrument on combined sustainability

ASIC has issued ASIC Corporations (Amendment) Instrument 2026/313, enabling related registered schemes to provide a single sustainability report in specified circumstances. The relief applies where relevant entities are relying on relief to combine financial reports that cover each of the entities.

While this provides reporters with some reduction in regulatory burden, the instrument does not allow for a single sustainability report covering all related entities. The FSC will continue to work with ASIC to streamline compliance with the sustainability reporting framework.

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ASIC consults on net tangible asset requirements for responsible entities

The FSC has made a submission to ASIC’s consultation on net tangible assets (NTA) requirements for responsible entities (REs). The consultation considers potential changes to NTA requirements, which were last updated in 2013. ASIC’s proposals include increasing NTA thresholds, changing the concessional NTA framework, reviewing liquidity requirements, and considering whether NTA requirements should apply to other Australian financial services licensees, including platform operators and managed discretionary account providers.

The FSC submission supported a targeted recalibration of NTA thresholds, with a preference for periodic review every three to five years rather than automatic annual CPI indexation. The FSC also supported retaining the concessional NTA framework, with proportionate increases to ensure REs remain entities of substance. The submission further recommended that NTA requirements should not duplicate capital obligations where connected entities perform multiple roles. It also noted there may be scope to consider NTA requirements for managed discretionary account providers, subject to further industry consultation.

ASIC is considering submissions and engaging with the FSC on draft proposals and impact on industry. It has indicated it intends to release a final instrument by 31 July 2026.

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.sible entities

Division 296 tax on superannuation balances above $3 million

On 10 March 2026, the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 and its associated Imposition Bill passed the Senate without amendment. The legislation gives effect to the Division 296 tax on individuals with total superannuation balances above $3 million and includes associated amendments relating to the low-income superannuation tax offset (LISTO).

The legislation, as enacted, is substantively unchanged from the exposure draft released in December 2025, with no material changes to the core design of the measure or its 1 July 2026 commencement date.

In March, Treasury consulted on the supporting draft regulations and explanatory materials. The FSC lodged a submission focused on ensuring the framework is implemented in a practical, proportionate and administrable manner. The submission made nine targeted recommendations relating to valuation methodologies, attribution settings across different fund and product structures, the treatment of innovative and hybrid income streams, and the sequencing of ATO administrative processes with existing reporting obligations.

The FSC continues to engage closely with Treasury and the ATO through the Superannuation Practitioners Group to support implementation and resolve operational issues ahead of commencement. Treasury is expected to finalise the regulations in the coming weeks, with further ATO guidance anticipated before the first reporting period.

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Foreign resident CGT reforms

Treasury has concluded consultation on the draft legislation to expand Australia’s foreign resident capital gains tax (CGT) regime. The FSC lodged a submission raising concerns that aspects of the proposed framework risk undermining investment certainty, increasing compliance burdens and discouraging long-term foreign investment into infrastructure, energy and other capital-intensive sectors.

Key FSC recommendations included expanding transitional relief and grandfathering arrangements, aligning the broadened TARP definition with the MIT regime, refining the definition of TARP to better reflect international standards, increasing the non-IARPI vendor notification threshold, and limiting the retrospective operation of the regime.

While consultation has now closed, legislation has not yet been introduced into Parliament. Notwithstanding this, the 2026-27 Federal Budget’s forward estimates concerningly assumed the measure would be implemented as per the exposure draft. The FSC will continue engaging with Treasury as the Government considers the final design and next steps before Parliament.

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SUPERANNUATION

Shield and First Guardian Policy Response - Superannuation member consumer protections

Treasury has released a consultation paper on enhancing consumer protections in the superannuation sector. The paper proposes reforms to strengthen protections around superannuation switching and financial advice following the Shield and First Guardian collapses. Key proposals include introducing waiting periods for inter fund superannuation switches, limiting fee deductions for switching related financial advice, and increasing penalties under the SIS Act to strengthen deterrence and trustee accountability. The reforms are intended to reduce misconduct, improve consumer protection and restore confidence in the superannuation system. The paper also proposed specific protections related to superannuation platforms (see platforms update below for more information).

In its submission, the FSC supported the objective of stronger consumer protections but opposed mandatory waiting periods and restrictions on advice fee deductions, arguing these measures would create unnecessary friction, reduce access to financial advice and impose operational complexity without addressing the root causes of misconduct. Instead, the FSC advocated for targeted reforms including enhanced ASIC oversight, and action against harmful lead generation practices. The FSC maintained that professional financial advice involving superannuation switching remains an important and legitimate part of holistic financial planning. On enforcement, the FSC supported increasing SIS Act penalties to better align with the Corporations Act, provided reforms remain proportionate and targeted. The FSC has also provided support for a form of trustee compensation model (more information under the platforms section of the Policy Update). The FSC’s submission also maintains a model-agnostic approach to trustee governance and recommends Treasury consider how to ensure accountability is consistent across all models. Overall, the FSC argued for a risk based and enforcement focused reform package that strengthens governance and consumer safeguards while preserving competition, member choice and access to financial advice.

See more content on the Shield and First Guardian policy response in the Platforms, Investment and Cross-Portfolio sections.

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Government consults on next phase of performance test review

Treasury has released a consultation paper on options on strengthening the superannuation performance test. The consultation follows the Treasurer’s 2025 Economic Reform Roundtable and considers whether the test should be refined to reduce unintended barriers to investment while maintaining an objective and credible framework for assessing product performance.

The consultation seeks feedback on four main reform options:

introducing a new emerging asset class benchmarked against CPI + X;
changing the existing Alternatives asset class benchmarks;
replacing the current strategic asset allocation benchmark framework with a simple reference portfolio test; and
extending the test to externally directed accumulation products, with future consideration of single-sector and retirement products.

The FSC is developing a submission in consultation with members. Member feedback will be sought on the consequences of the proposed expansion to externally directed products, how the test currently applies to platform trustee-directed products, and the potential industry burden associated with moving to a simple reference portfolio, including the costs of adjusting portfolios to manage to the new test. The FSC is expected to support targeted and proportionate refinements that improve the operation of the test while preserving its role in protecting members from underperformance. This includes continuing support for the FSC’s previously recommended CPI+X% benchmark and routine benchmark reviews, and suggestions to address the high cost of index provider fees.

It is positive that the consultation paper does not propose changes to the fee-calculation methodology for any option. The FSC has consistently supported the continued use of current year fees, as this maintains a forward-looking incentive for trustees to keep fees low for members.

The FSC will continue engaging with Treasury and members to ensure any reforms are targeted, workable and support strong consumer outcomes.

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Superannuation industry comes together in first joint cyber and economic crime roundtable

The Government has commenced consultation on draft legislation designed to prevent convicted child sexual abusers from hiding their assets in superannuation to avoid paying compensation to their victims. The draft legislation will enable victims and survivors of child sexual abuse to seek access, via a court order, to additional personal or salary sacrifice superannuation contributions made by the offender where a related court order for compensation remains unpaid after 12 months.

The FSC previously made a submission to the early policy consultation, agreeing with the aims of the policy but noting that superannuation should not be used for every possible compensatory purpose.

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Government considers next steps for performance test design changes

The Treasurer is continuing to consider the next phase of reforms to the annual superannuation performance test, following the conclusion of the recent technical consultation process.

Treasury recommenced engagement on the performance test to examine whether targeted refinements could provide greater flexibility for institutional investment into areas of national priority, such as renewable energy, social and affordable housing, and other emerging assets, while maintaining an objective and credible test.

During the technical phase, Treasury engaged with a selected group of industry experts, including several FSC members, to explore potential benchmark design options in greater detail. Discussions were primarily concentrated on:

A targeted CPI + X benchmark concept for certain emerging asset classes; and
Replacing the current benchmark framework with a simple reference portfolio test.

The FSC understands that the Technical Working Group discussions have now concluded and that the Government is considering next steps with the consultation process.

While fee settings and potential expansion of the test were not a central focus of the recent technical sessions, the FSC understands these remain areas of broader Government consideration as part of the overall review.

The FSC will continue engaging constructively with Treasury, to ensure any changes are targeted and proportionate, as the review progresses and will update members as further detail emerges.

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APRA and ASIC publish expectations on AI Governance for regulated entities

On 30 April 2026, APRA released a letter to industry outlining key observations and expectations regarding the use of AI by regulated entities. The letter followed APRA’s targeted engagement with a group of large banks, insurers and superannuation trustees in late 2025.

APRA observed that AI adoption was increasing rapidly across the entities reviewed, but that governance, risk management and operational resilience practices varied significantly in maturity. APRA signalled an increased supervisory focus on AI and stated that Boards are expected, at a minimum, to:

maintain sufficient understanding and literacy with respect to AI in order to set strategic direction and provide effective challenge and oversight
oversee an AI strategy which is consistent with the entity’s risk appetite and tolerance settings, supported by effective monitoring and reporting (including for third party dependencies), with clearly defined triggers aligned to resilience objectives to enable timely action when not operating as expected

Shortly afterwards, on 8 May 2026, ASIC also wrote an open letter to industry emphasising the need for continued cyber resilience uplift. ASIC highlighted that the misuse of increasingly sophisticated frontier AI models could materially accelerate the scale, speed and sophistication of cyber threats and vulnerabilities faced by regulated entities.

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APRA implementation of the Retirement Data Reporting Framework

On 23 February 2026, Treasury released the finalised retirement data reporting framework. The intention of the proposed framework is to provide greater transparency around superannuation trustees’ implementation of retirement income strategies required under the Retirement Income Covenant.

APRA has now commenced its consultation on the proposed data collection to implement the Retirement Reporting Framework. The proposed collection includes:

indicators on trustee offerings, including drawdown options, access to lifetime income products and access to personal financial advice;
metrics on member behaviour, including take-up of retirement products, drawdown levels and balance utilisation in retirement; and
segmentation of the data by member attributes to enable comparison of retirement outcomes across different cohorts.

It includes the introduction of a new reporting standard SRS611.1 Retirement Member Profile and modifications to reporting standards SRS101.0 Definitions for Superannuation Data Collections and SRS 607.0 RSE Business Model.

The FSC is currently engaging with the Retirement Data Collection Working Group to develop our submission, which is requested by 3 June 2026.

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APRA finalises targeted amendments to CPS 230

APRA has finalised targeted amendments to prudential standard CPS 230 Operational Risk Management, prudential practice guide CPG 230, and the corresponding Material Service Provider Register template. The amendments introduce limited exemptions from specific contractual requirements in CPS 230 for material arrangements with certain categories of non-traditional service providers (NTSPs), like central banks and clearing and settlement facilities, where contractual compliance is not practicable. Full details of the changes can be accessed here.

Positively, APRA has moved away from a NTSP list of individual providers and towards an exemption by “provider type”, consistent with the FSC’s submission. APRA also intends to grant exemptions for additional service providers by written notice where appropriate.

The amendments will come into effect from 1 July 2026.

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APRA finalises adjustments to the capital settings for longevity products

The FSC has lodged a submission in response to the ASIC’s consultation on proposed amendments to stamp duty disclosure under RG97.

The FSC supports retaining stamp duty within RG97 transaction cost disclosures and smoothing it over time to reflect its long-term, capital nature and reduce volatility in annual fee outcomes.

However, the FSC has raised concerns that the proposed historical averaging approach may result in disproportionate cost recognition for newer products and inconsistent disclosures between products holding identical assets. To address this, the FSC has recommended a straight-line allocation over a clearly defined period to improve equity and comparability across products.

The submission also calls for clear guidance on transition arrangements, calculation methodologies, and alignment with unit pricing treatment to avoid unnecessary complexity.

In relation to ASIC’s private debt disclosure proposal, the FSC has supported the proposed class relief to improve alignment between internally and externally managed arrangements, while emphasising the need for adequate implementation timeframes to support orderly adoption.

The FSC will continue engaging with ASIC to support disclosure outcomes that are transparent, workable and comparable for members.

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ADVICE

Financial Advice Education Standards consultation

On 17 March, the Minister for Financial Services Dr Mulino released a Treasury consultation on reforms to financial adviser education requirements designed to expand the availability of high quality and safe financial advice for Australians. The consultation outlines a framework which aims to create a sustainable and flexible pathway for new advisers to enter the profession, to help address the decline in the number of advisers over recent years.

The framework is consistent with the Government’s February 2025 announcement and is broadly aligned with proposals advanced by the advice profession in recent years, including through the Joint Associations Working Group (JAWG). In particular, it permits new entrants to hold a Bachelor degree in any discipline, provided they have completed the relevant prescribed subjects. This is a positive development which demonstrates a commitment to the advice profession on this key reform, especially given the recent reprioritisation of the DBFO reforms.

The FSC’s submission was strongly supportive of the introduction of the proposed new qualification standard and it encourages the Government to progress the reforms quickly through the necessary legislative phase, with the flexibility to develop the framework through regulation. The FSC was also a signatory to a supportive statement issued by the Joint Associations Working Group (JAWG).

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Delivering Better Financial Outcomes (DBFO) Tranche 2

The DBFO Tranche 2 reforms remains a Government priority. However, the Minister has indicated that the financial system policy response to the Shield and First Guardian collapses (outlined above) will take precedence.

In response to direct industry advocacy on the consumer protection benefits of the DBFO reforms, the Minister indicated earlier this year that he would consider how the reforms could be integrated into a broader consumer protection package, rather than progressed separately. In more recent public comments (May), the Minister reiterated that the Shield and First Guardian collapses have reshaped the scope of the DBFO work. He noted that the reforms have become more extensive than initially anticipated and are now closely connected to the broader consultations currently underway. The Government is therefore considering financial services more holistically across the CSLR, consumer protections, DBFO and adviser education reforms.

The FSC continues to advocate for the progression of the DBFO reforms during this term of Parliament.

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ASIC review of compliance in the managed accounts sector

Through engagement with ASIC and member firms, the FSC understands that the regulator’s investigations into compliance in the managed accounts sector are well progressed. It has requested information from platforms and other providers about the Separately Managed Account (SMA) arrangements they have in place in the market and have now shifted to reviewing relevant advice provided. ASIC continues to reiterate that its surveillance centres around three core focus areas:

governance frameworks – how AFS licensees oversee and govern managed account programs
managing conflicts of interest – what conflicts exist and how they are managed and
consumer outcomes / advice conduct obligations - whether advisers recommending managed accounts are complying with their best interests and advice obligations, and whether clients are actually getting appropriate outcomes and value.

The FSC understands that ASIC plans to release a report on its findings in the latter half of 2026.

The FSC’s Managed Accounts Expert Group met in April to discuss the scope of ASIC’s review and ongoing FSC advocacy. The Group will provide a managed accounts policy perspective into FSC policy positions and submissions, and has already had the chance to do so through current consultations on foot – including ASIC’s CP 388 on Net tangible asset requirements for responsible entities, and ASIC’s proposed remake of ASIC Corporations (Managed Discretionary Account Services) Instrument 2016/968 – see below).

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ASIC proposed renewal of Managed Discretionary Accounts (MDAs) Instrument

In March ASIC released a consultation paper on the proposed renewal of the ASIC Corporations (Managed Discretionary Account Services) Instrument 2016/968 (Instrument) ahead of its scheduled expiry on 1 October 2026. ASIC Instrument 2016/968 provides conditional relief for MDA providers and external MDA custodians, from the managed investments provisions in Chapter 5C, and the product disclosure provisions in Chapter 6D and in Part 7.9 of the Corporations Act. It also modifies the financial services disclosure provisions in Chapter 7.7 of the Corporations Act to provide conditional relief in relation to statements of advice and financial services guides for MDA services.

The FSC consulted working groups, including the Managed Accounts Expert Group, to provide a response to the consultation. The FSC’s submission suggested that this relief could extend for a period of up to five years. Based on member feedback, the submission also commented on certain targeted, technical matters that could be considered as part of the review of the Instrument to enhance and improve the MDA regulatory framework. Any significant changes should not be considered until after the current managed account and MIS reviews are complete.

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ASIC proposal to add Australian Financial Services Licensee (AFSL) websites to the public register

In February, ASIC announced it has commenced a review of advice licensees using lead generation services as part of its ongoing program of work to address practices that inappropriately or unnecessarily encourage consumers to switch their superannuation. As part of the review, ASIC published a consumer-facing list of known entities involved in lead generation, those acting as referral partners, and advice licensees or corporate authorised representatives that have acquired leads, since 1 July 2024.

See more below in ‘Legal, Tax & Cross-Portfolio’.

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Digital Advice

In April, the FSC released The Role and Value of Digital Advice in Australia, developed in collaboration with CoreData and Borromean Consulting. The report examined the evolving role of digital advice across the advice ecosystem, drawing on national consumer research, industry interviews and international case studies.

The research found that digital advice is emerging as a trusted and accessible complement to professional financial advice, helping consumers engage with their finances earlier, build confidence in financial decision-making, and seek full professional advice sooner. The report also highlighted strong consumer preference for hybrid advice models combining digital tools with human judgment.

The FSC continues to progress work through the Digital Advice Expert Group, which will now consider next steps for advocacy and policy engagement arising from the report, including its relevance to the Government’s broader DBFO agenda.

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FSC White Paper on the value and future of advice licensing

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PLATFORMS

Shield and First Guardian Policy Response - platform-specific enhancing consumer protection measures

Proposals to strengthen platform trustee governance
The consultation proposed a suite of prescriptive measures aimed at “strengthening platform governance” including requiring platform trustees to impose holding limits on investment options to improve diversification and reduce concentration risk; legislating minimum due diligence requirements for onboarding and monitoring platform investments; restricting platform related payments or benefits linked to product listing, placement or member flows.

The FSC’s submission does not support the introduction of a separate regulatory framework for platform trustees, including separate definitions, codified due diligence requirements, or platform-specific restrictions on conflicted arrangements. Existing trustee obligations under the SIS Act and APRA prudential standards already provide a strong framework for investment governance and due diligence, supplemented by the FSC’s Standard 31. Where improvements are needed, these should be delivered through enhanced guidance and stronger supervision rather than new legislative layers.

Proposal to create a platform trustee compensation mechanism
The consultation proposed the introduction of a new compensation mechanism that would place a direct obligation on “platform trustees” to compensate members for defined “eligible losses”, that is, losses arising from external fraud or theft leading to the collapse of an investment product, rather than normal market losses.

The FSC’s submission acknowledges that a codified compensation mechanism could constitute a key element of a successful package that would help to materially reduce the risk of detrimental consumer loss in the system. The FSC’s position is that it should be carefully calibrated and limited in scope. In particular, any such mechanism should:

apply on a sector-neutral and functional basis (that is, where a trustee offers a broad, member directed menu with access to externally managed investments) rather than being targeted at “platform trustees” as a distinct category;
be confined to “eligible losses” arising from deficient investment governance processes under existing legal obligations;
avoid prescriptive capital requirements, instead adopting a principles-based approach to ensuring trustees have access to sufficient financial resources; and
include a regulator-led mechanism (preferably ASIC) to determine eligibility and apportion or cap compensation, supported by appropriate rights of independent review.

See more content on the Shield and First Guardian policy response in the Superannuation, Investment and Cross-Portfolio sections.

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FSC releases Standard 31 - Wrap Superannuation Platform Trustee Investment and Adviser Governance Principles: Standard and Better Practice Guidance

In April 2026, the FSC released Standard 31 - Wrap Superannuation Platform Trustee Investment and Adviser Governance Principles: Standard and Better Practice Guidance. The Standard and guidance cover platform trustee responsibilities including initial due diligence of investment options, the ongoing monitoring of investment options, due diligence when onboarding licensees / advisers, and oversight of advice fee deductions.

The Standard was developed as an industry-led initiative to strengthen governance practices across wrap platforms and to achieve meaningful uplift and more consistent practice within the existing legislative and regulatory framework. In particular, it strengthens expectations around:

initial due diligence of investment options, requiring trustees to assess the product issuer and investment manager across track record, governance, conflicts management, and disclosure.
the use of holding limits, requiring trustees to consider limiting the amount of a member’s portfolio that can be invested in an option to manage concentration, liquidity and valuation risks.
ongoing monitoring of investment options, with clear expectations for regular and trigger-based reviews against material changes in performance, risk and liquidity, and requiring defined escalation pathways where concerns emerge.
governance of advice businesses using platforms, including the use of data to identify high-risk behaviours across advisers.
oversight of advice fee deductions, requiring trustees to implement controls to detect and take action against inappropriate fee charging.
protections for unadvised members, including limiting access to a simpler investment menu and issuing proactive, factual communications.

The Standard will commence from 1 July 2026, with a six-month transition period before full compliance is required from 1 January 2027. FSC platform members cover an estimated 89% of total platform FUM and include the seven largest wrap platforms by market share.

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INVESTMENTS

Shield and First Guardian Policy Response - Government provides funding to ASIC for enhanced MIS data collection

The 2026-27 Budget provides funding to ASIC to enhance its use of data in supervising the managed investment scheme sector. The FSC has previously advocated for improved MIS data collection to support more effective risk-based supervision as part of the Government’s MIS oversight and governance consultation. The FSC considers this a central element in reducing the risk of consumer harm and financial detriment in the system.

The FSC understands Treasury will undertake further consultation on the data collection framework, including data collected at registration, on a recurring basis and through event-based notifications.

The FSC will continue to advocate that any data collection should be directly linked to risk-based supervision, minimise industry burden and align with the Government’s “tell us once” principle, noting existing APRA platform product data collections.

See more content on the Shield and First Guardian policy response in the Superannuation, Platforms and Cross-Portfolio sections.

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FSC continues to develop private markets best practice standards

The FSC is continuing to develop an industry Standard to support improved practices across private markets, with an initial focus on private credit. The Standard is being developed in close consultation with members to ensure it is practical and proportionate across different private markets structures, while addressing key areas identified for uplift, including valuation practices, governance, liquidity management, credit risk management and conflicts of interest.

The FSC will shortly commence targeted consultation with ASIC and key external stakeholders to ensure the Standard is fit for purpose, meets regulatory expectations and can support broader industry practice. The FSC expects to finalise the Standard early in the second half of 2026. It will include transition arrangements to allow FSC members time to adapt to and apply the new requirements.

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Reforms to streamline the foreign investment framework

Following announcements in the 2026-27 Budget to further streamline the foreign investment framework through a risk-based approach, Treasury has released updated information on Australia’s foreign investment policy and proposed reforms to the foreign investment framework.

Key measures include a new target for decisions on low-risk investments to be made within 30 days from 1 January 2027, as well as reducing the need for repeated applications through broadened Exemption Certificates and exempting specified low-risk activities from notification and assessment requirements. The FSC supports initiatives to simplify regulatory requirements and reduce barriers to international investment in Australia, particularly for low-risk activities by trusted investors.

The reform paper also proposes expanded powers for the Treasurer to intervene in managing higher-risk investments, including to apply conditions and adjust notification requirements in sensitive sectors and in circumstances of emerging or changing risks. It is important that these are targeted and proportionate to specific risks and supported by clear safeguards that minimise uncertainty and potential sovereign risk.

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Beneficial ownership register implementation

Legislation implementing a public beneficial ownership register for corporations has been passed by Parliament as part of the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025. In April, ASIC conducted public consultation on drafts of an instrument, form and related amendments to guidance.

It is important that implementation of the measures, which are designed to apply to corporate structures, do not have unintended consequences for trusts. The FSC has recommended that the framework should not apply to passive investments tracking benchmarks or indices, where there is no potential for control or influence.

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Sustainable investment product labelling policy design

A second round of consultation by Treasury on policy design for a product labelling framework for sustainable investments has concluded. The FSC has recommended a principles-based approach that effectively supports consumer understanding of the sustainability features of financial products while allowing for products that adopt a range of strategies and methodologies to achieve sustainable investment goals.

The FSC will continue to engage on the development of the framework as Treasury considers next steps following the consultation.

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LEGAL, TAX & CROSS-PORTFOLIO

Shield and First Guardian Policy Response - Reforms to address harmful lead generation

Treasury has released a consultation paper on curbing harmful lead generation practices, as part of the broader response to the Shield and First Guardian collapses. The paper proposes a range of reform options to enhance accountability, including bringing lead generators within the AFSL regime, banning unlicensed communication about superannuation, strengthening licensee accountability, and extending the Design and Distribution Obligations (DDO). It also canvasses extending anti-hawking requirements, targeting remuneration structures that may incentivise poor conduct, and enabling earlier intervention in advertising practices.

In its submission, the FSC strongly supported bringing lead generators within the licensing perimeter as its primary reform priority, ensuring they are subject to clear conduct obligations, oversight and enforcement. The FSC considers this an important element in reducing the risk of mis-selling products that are not appropriate for retail consumers. The FSC stressed that the effectiveness of this reform will depend on a clear and tightly scoped definition of “lead generation” that excludes legitimate activities, including incidental, product-agnostic referrals made in the ordinary course of business. The FSC also supported “reasonable steps” obligations on licensees for the conduct of lead generators as a complement to direct licensing at source.

The FSC also supported stronger consent requirements so consumers clearly understand who they are engaging with, how their data will be used, and any associated benefits. In addition, the FSC supported a targeted extension of the conflicted remuneration provisions to address residual incentive risks, alongside greater transparency and enforcement measures at the advertising stage.

The FSC did not support broader measures that could create unintended consequences – including reduced access to advice, diminished consumer choice and weaker competition – without addressing the root causes of harm identified. In particular, the FSC strongly opposed removing or narrowing the anti-hawking exemption for financial advice. The FSC also opposed expanding the scope of “benefits” captured under the conflicted remuneration ban, on the basis that it would create uncertainty for legitimate commercial arrangements, increase regulatory complexity, and duplicate existing protections without delivering clear commensurate consumer benefit.

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Shield and First Guardian Policy Response - Reform options for the Compensation Scheme of Last Resort (CSLR)

In April 2026, Treasury commenced consultation on the CSLR – reform options to support ongoing sustainability. This paper forms part of a broader consultation package intended to inform the Government’s policy response to the Shield and First Guardian collapses. These papers are interconnected, with the CSLR paper making references to proposals featured in Treasury’s other consultation paper on Enhancing member protections in the superannuation system.

The FSC’s submission supports several proposals put forward by the options paper, including enabling the CSLR to deduct payments from compensation, enhancing the CSLR operator’s subrogation rights, limiting CSLR-eligible compensation to capital losses and excluding SMSFs by default (potentially allowing SMSFs to opt-in to CSLR eligibility). These reform proposals have the dual benefit of better aligning the scheme to its policy intent and bringing down its costs.

The FSC’s submission also cautions against the proposed ‘waterfall’ special levy framework, which would require identifying subsectors “connected” to the underlying misconduct to contribute before costs are spread more broadly across the financial services sector. Instead, the FSC has encouraged Treasury to adopt a more pragmatic approach that spreads the costs as broadly as possible, recognising that any entity captured by a special levy, regardless of sector, is ultimately contributing to compensate for misconduct with which it had no direct involvement.

See more content on the Shield and First Guardian policy response in the Superannuation, Platforms and Investments sections.

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Thin capitalisation statutory review

Consultation on the Board of Taxation’s statutory review of the thin capitalisation amendments introduced by the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Act 2024 has now closed, and the FSC has made a submission focused on ensuring the rules operate consistently with commercial practice and do not unintentionally deter internationally sourced investment.

The FSC’s submission highlighted concerns raised by members regarding uncertainty around the deductibility of third-party debt, the treatment of refinancing and restructuring arrangements, and impacts on infrastructure, energy and other capital-intensive greenfield projects where offshore guarantees or letters of credit are commonly used.

The FSC also raised concerns regarding divergence between ATO guidance, market practice and existing legal precedent, and emphasised the importance of maintaining Australia’s attractiveness for globally mobile capital.

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ATO PS LA 2026/D1 - Superannuation reporting penalties

The FSC lodged a submission in response to the ATO’s draft Practice Statement Law Administration 2026/D1 regarding penalties for failure to comply with superannuation reporting obligations under the MAAS and MATS regimes.

While acknowledging the importance of accurate and timely reporting, the FSC raised significant concerns regarding the proportionality and operation of the proposed framework for APRA-regulated superannuation funds. The submission focused on embedding proportionality earlier in the penalty framework, limiting inappropriate application of Significant Global Entity penalty multipliers, recognising voluntary disclosure and remediation at the point of assessment, and introducing structured pre-determination engagement processes for significant cases.

The FSC continues engaging with the ATO as the Practice Statement is finalised.

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Deregulation and productivity agenda

Federal Budget and Treasury process
The 2026-27 Budget included a funding commitment to continued efforts by Treasury and regulators to undertake regulatory simplification and productivity. The FSC continues to engage with Treasury on deregulatory reform options following the Economic Reform Roundtable process and the commitment in the Federal Budget to continue the process of identifying areas of legislative and regulatory streamlining.

The FSC continues to advocate for previously identified reform priorities, including:

product rationalisation
streamlined breach reporting
FAR reporting simplification
Improved DDO compliance certainty
reduced IDR reporting burden

Council of Financial Regulators (CFR)
The CFR (Treasury, ASIC, APRA and the ATO) continues to progress its Better Regulation Roadmap (published December 2025), which sets out a staged implementation approach to reducing regulatory burden.

Harmonising data collection remains a key priority. The FSC participated in CFR workshops in December 2025 and February 2026, providing feedback on proposed measures. The CFR has now published these measures as a package of actions, with the work focusing on 4 concrete outcomes:

Strengthening coordination and planning arrangements between regulators and enhancing transparency
Strengthening engagement between regulators and industry
Reducing duplication and inconsistencies in data collections
Streamlining existing data collections

The CFR has confirmed ongoing engagement with industry during implementation to ensure reductions in reporting burden are achieved – with the FSC continuing to pass on member feedback.

ASIC Report 830 – Regulatory Simplification
On 19 May, ASIC published Report 830 – Regulatory simplification report, providing an update on their regulatory simplification program, including feedback received on Report 813 and future reform priorities.

Report 830 outlines key initiatives progressed to date – including:

redesign of the ASIC website, including improved navigation, enhanced search functionality and 280 updated form landing pages
expansion of the availability of electronic lodgement to 88 forms (a 380% increase)
enabling electronic signatures across approved ASIC PDF forms
updating 18 regulatory guides and withdrawing 11 outdated or consolidated guides (between Dec 2024 and Dec 2025)
developing an ASIC Regulatory Guidance Strategy focused on clearer drafting, improved navigation, plain English guidance and consolidation of guidance materials
piloting sector-specific regulatory roadmaps for small company directors and financial advice businesses (to be published H1 2026)
incorporating best-practice drafting principles into legislative instruments from Sept 2025
ongoing work with APRA and the CFR to reduce duplication in regulatory data collection

Report 830 also outlines a forward reform agenda for the next six months focused on:

further simplifying and consolidating of regulatory guidance and legislative instruments, including:
- a new simplified platforms instrument and updated guidance
- a consolidated financial reporting instrument and a consolidated audit instrument, as two distinct instruments
continuing expansion of digital lodgement and digital transactions
continuing improvement to ASIC website search functionality, including exploring AI-enabled search and enhanced filtering tools (subject to funding)
continuing work with APRA and other regulators in the CFR to streamline and consolidate data requests (see CFR section above)
supporting law reform initiatives aimed at reducing compliance burden, including consultation on simplifying substantial holding notices through Consultation Paper 387. [ASIC have noted that while they will continue to engage with Treasury on ideas related to law reform, this is ultimately a matter for Government – see Treasury potential legislative reform section above]

The longer-term reform agenda focuses on more consistent, secure and user-centred digital services, including the RegistryConnect program (subject to Government funding and policy decisions). In 2026, RegistryConnect is expected to (i) modernise ASIC company register searches using updated APIs, and (ii) improve consistency and efficiency as registers migrate to modern systems. By 2027, it should (i) deliver streamlined digital interactions for company registrations and lodgements and (ii)commence director ID linking from 1 July 2027 (subject to law reform). ASIC is also looking to continue discussions with Government about the “Digital Front Door” concept proposed in 2025. If implemented, this would provide a single integrated platform reducing fragmentation across ASIC systems, channels and services.

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Anti Money Laundering and Counter-Terrorism Financing (AML / CTF)

AUSTRAC Rules
AUSTRAC finalised its AML/CTF Rules in August 2025 – the new requirements for existing reporting entities (Tranche 1) commenced on 31 March 2026 (subject to certain transitional arrangements), with Tranche 2 entities to follow from 1 July 2026. The FSC continues to engage closely with AUSTRAC to clarify expectations and support members through implementation, including responding to targeted amendments and consultation processes.

AUSTRAC has emphasised that implementation plans are the primary mechanism for managing compliance where entities are not able to meet all new obligations by the commencement date. Plans should clearly set out the current and future state, implementation roadmap, timelines, accountability and risk mitigation approach. AUSTRAC has also indicated that further refinements to the Rules will continue post-implementation, including targeted consultations.

Department of Home Affairs Transitional Provisions
In recognition of the scale of change for the financial services sector, the Department of Home Affairs introduced a three-year transitional provision for implementation of the initial customer due diligence (ICDD) section of the reforms.

The transitional framework allows current reporting entities to continue applying existing Applicable Customer Identification Procedures (ACIP) during the transition period (31 March 2026 to 30 March 2029), rather than immediately adopting the new ICDD requirements. The rules were updated to permit staged implementation, rather than requiring a single, simultaneous cut-over date.

By 1 July 2026, reporting entities relying on this relief must:

identify the customer cohorts to which ACIP will continue to apply; and
document transition dates for each cohort to move to the new ICDD framework.

OAIC Privacy Guidance
In late February, the Office of the Australian Information Commissioner (OAIC) published privacy guidance in relation to the handling of customer identification documents. This required that, from 31 March 2026, entities must cease retaining certified copies of ID documents for AML/CTF purposes – an approach that conflicted with the DHA’s transition period for ICDD as well as longstanding industry practice.

In response to urgent industry engagement, the OAIC subsequently updated this guidance, shifting from a prescriptive requirement to a principles-based “reasonable steps” approach to the destruction or de-identification of personal information once it is no longer required.

The FSC will continue to engage with the OAIC on further implications, including the retention of ID documents for fraud prevention and other legal obligations.

FSC AML forms
The FSC has completed the update of the joint FSC/FAAA AML customer identification forms and these are now available to members free of charge to support consistent and efficient implementation of the new rules. The 2026 forms replace the existing set and are designed to support both:

ACIP under the previous AML/CTF framework (for entities still transitioning); and
ICDD requirements under the new regime.

The FSC and FAAA will shortly begin updating FSC Guidance Note 24 Managing AML/FATCA and CRS Customer Identification Obligations to reflect the new regime and support use of the forms.

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You are here: FSC HomeNewsPolicy UpdatesFSC Policy Update - Issue 90 - May 2026

FSC Policy Update - Issue 90 - May 2026

PARLIAMENT, LEGISLATION & REGULATION

2026-27 Federal Budget

Financial Adviser registration

Government passes legislation allowing victims of child sexual abuse to access their offender's superannuation

Foreign Financial Service Providers (FFSPs)

Ban on superannuation advertising during employee onboarding passes Parliament

ASIC instrument on combined sustainability

ASIC consults on net tangible asset requirements for responsible entities

Division 296 tax on superannuation balances above $3 million

Foreign resident CGT reforms

SUPERANNUATION

Shield and First Guardian Policy Response - Superannuation member consumer protections

Government consults on next phase of performance test review

Superannuation industry comes together in first joint cyber and economic crime roundtable

Government considers next steps for performance test design changes

APRA and ASIC publish expectations on AI Governance for regulated entities

APRA implementation of the Retirement Data Reporting Framework

APRA finalises targeted amendments to CPS 230

APRA finalises adjustments to the capital settings for longevity products

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ADVICE

Financial Advice Education Standards consultation

Delivering Better Financial Outcomes (DBFO) Tranche 2

ASIC review of compliance in the managed accounts sector

ASIC proposed renewal of Managed Discretionary Accounts (MDAs) Instrument

ASIC proposal to add Australian Financial Services Licensee (AFSL) websites to the public register

Digital Advice

FSC White Paper on the value and future of advice licensing

PLATFORMS

Shield and First Guardian Policy Response - platform-specific enhancing consumer protection measures

FSC releases Standard 31 - Wrap Superannuation Platform Trustee Investment and Adviser Governance Principles: Standard and Better Practice Guidance

INVESTMENTS

Shield and First Guardian Policy Response - Government provides funding to ASIC for enhanced MIS data collection

FSC continues to develop private markets best practice standards

Reforms to streamline the foreign investment framework

Beneficial ownership register implementation

Sustainable investment product labelling policy design

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LEGAL, TAX & CROSS-PORTFOLIO

Shield and First Guardian Policy Response - Reforms to address harmful lead generation

Shield and First Guardian Policy Response - Reform options for the Compensation Scheme of Last Resort (CSLR)

Thin capitalisation statutory review

ATO PS LA 2026/D1 - Superannuation reporting penalties

Deregulation and productivity agenda

Anti Money Laundering and Counter-Terrorism Financing (AML / CTF)

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FSC Policy Update - Issue 90 - May 2026