Retail MISs under review: Treasury’s six reform proposals

On 10 February 2026, Treasury released a consultation paper, Enhancing oversight and governance of managed investment schemes, proposing a significant uplift to the governance and oversight framework for registered managed investment schemes (MISs). Submissions on the Consultation Paper close on 27 February 2026.

Why are these changes to MISs being proposed?

The Consultation Paper follows a series of retail MIS collapses, including most recently the Shield Master Fund and First Guardian Master Fund, which exposed weaknesses in governance oversight and placed more than A$1 billion of superannuation savings at risk. The proposed reforms form part of a broader Government response aimed at strengthening consumer protections and restoring stability and confidence across the superannuation and financial services sectors.

Treasury considers that the existing framework, including compliance plan requirements, conflicts management obligations and related-party transaction rules, has not sufficiently mitigated these risks or enabled early regulatory intervention. The reforms therefore seek to strengthen governance structures at the responsible entity (RE) level while providing ASIC with enhanced scheme-level data to support earlier detection of emerging risks.

The scale of the sector reinforces Treasury's desire to introduce new policy. Approximately A$2 trillion is invested in registered MISs, with 3,587 schemes registered as at 30 June 2025. Given the breadth of retail participants and the history of systemic impact of governance failures, Treasury has signalled that incremental changes are unlikely to be sufficient. Instead, the Consultation Paper proposes a more structural recalibration of governance and supervisory settings.

Proposal 1: Strengthen the regulatory framework for compliance

Treasury proposes a four-limb uplift to the MIS compliance framework:

1. Compliance plans currently must set out measures to ensure compliance with the scheme constitution and the Corporations Act 2001 (Cth). While ASIC considers, amongst other things, whether the compliance controls in the compliance plan are aligned with the responsible entity’s values, objectives and strategy, taking into account the nature, scale and complexity of the scheme, the Corporations Act does not expressly require compliance plans to describe the specific characteristics and risks of the particular scheme. Treasury proposes that compliance plans be more prescriptive and scheme-specific, including a detailed description of the nature of the scheme and its investment strategy and how significant risks will be identified, monitored and managed (Proposal 1.1).

2. At present, liability for an RE and its officers can arise for any contravention of a compliance plan. Treasury proposes introducing a materiality threshold so that liability attaches only to material contraventions, amending the regime to focus on substantive non-compliance rather than technical breaches, with a view to incentivising higher quality plans (Proposal 1.2).

3. Compliance plan audits required by the Corporations Act currently don't have to be conducted in accordance with specified qualitative auditing standards. Treasury proposes requiring audits to be conducted in accordance with prescribed auditing and assurance standards, with the objective of strengthening the consistency of compliance plan assurance (Proposal 1.3).

4. Public companies must notify ASIC of director appointments and changes. Treasury proposes a comparable requirement for REs to notify ASIC of changes to compliance committee membership. The policy intent is to enhance ASIC’s visibility over compliance committee composition and support surveillance activity (for example by assisting in the detection of underlying governance tensions) (Proposal 1.4).

Proposal 2: Require a majority of external directors on the boards of REs

Treasury is consulting on removing the current option for an RE to rely on a compliance committee where less than half of its board are external directors. Instead, Treasury proposes mandating that a majority of the board comprise external directors.

Under the existing framework, an RE may either establish a compliance committee (where external director representation is below 50%) or ensure that at least half of its board comprises external directors. Proposal 2 would remove that structural flexibility and require independence to be embedded within the board itself, rather than satisfied through a separate compliance committee mechanism.

Treasury acknowledges potential implementation challenges. In particular, a majority-external director requirement could necessitate material restructuring of existing governance arrangements, with associated cost and transitional complexity. There may also be market capacity constraints in sourcing suitably qualified external directors, particularly for smaller REs, potentially increasing reliance on “RE-for-hire” structures which may present additional risks.

Proposal 3: Prohibit REs of registered MISs from conducting related party transactions, with limited exceptions

Citing the recent collapses of Shield and First Guardian and various ASIC enforcement matters involving related party lending and intra-group investments that resulted in significant investor detriment, Treasury proposes prohibiting REs from entering into related party transactions, subject to limited and clearly defined exceptions.

The proposal reflects a policy concern that existing safeguards, for example member approval requirements for financial benefits provided to related parties, have not sufficiently mitigated conflict risks arising from related party transactions. Therefore, Treasury is considering a prohibition-based model designed to prevent conflicted transactions from arising in the first place. This could include restricting REs from investing in or lending to entities that are related bodies corporate of the RE, or entities controlled by members of the RE’s board.

Treasury also seeks feedback on whether specific exemptions may be required where the investment manager of an MIS is a related party of the RE. In doing so, the Consultation Paper notes that previous policy reviews have considered structural separation between REs and investment managers, but have not conclusively demonstrated that formal independence necessarily produces improved consumer outcomes. The proposal is broadly consistent with themes raised in ASIC Report 820 Private credit surveillance: Retail and wholesale, which emphasised the importance of REs maintaining independence from the business. In that report, ASIC observed that such separation can assist in managing conflicts and reducing the risk of unfair investor outcomes.

Proposal 4: Amend the framework for setting financial requirements for REs

Treasury is consulting on whether the legislative framework should prescribe clearer and more specific financial resource requirements for REs. This proposal is distinct from ASIC’s anticipated consultation early this year on net tangible asset (NTA) requirements for REs, foreshadowed as part of its broader funds management and capital markets reform agenda, which is expected to consider an RE's capital holding requirements, including the specific NTA requirements.

Currently, REs are subject to the general AFSL obligation under section 912A(1)(d) of the Corporations Act to maintain “adequate financial resources”, supplemented by ASIC legislative instruments prescribing minimum NTA and cash requirements. The Consultation Paper is considering whether this framework, which relies heavily on high-level “adequacy” concepts, should instead incorporate more explicit legislative requirements. By way of example, the consultation questions whether more specific capital requirements or reserve arrangements could be imposed.

Proposal 5: Increase ASIC's data collection powers on the retail MIS sector

Treasury considers that ASIC’s current data collection framework is fragmented and largely focused at the RE level, limiting the regulator’s ability to identify emerging risks within individual schemes at an early stage. While ASIC can obtain information through notices and targeted surveillance, it does not routinely receive standardised and recurrent scheme-level data across the retail MIS sector. Although APRA shares certain data with ASIC, its collection is confined to MISs offered through superannuation trustees and does not provide comprehensive visibility across the broader retail MIS market.

Treasury proposes increasing ASIC's access to data including through the collection of both recurrent and event-based data at the scheme level. This could include information provided at the point of scheme registration regarding the nature and structure of the MIS, periodic reporting on key operational and governance matters, and notification of specified events.

Treasury also contemplates enhanced transparency and competition through the publication of aggregated or sector-level data, similar to reporting approaches adopted by other regulators. ASIC could publish anonymised or consolidated statistics to improve market visibility of trends and risk indicators across the retail MIS sector which would have the intent of supporting ASIC's regulatory oversight and competition.

Proposal 6: Alerts to ASIC about superannuation switching

Treasury proposes introducing a mandatory alert regime requiring superannuation trustees to report to ASIC suspicious or anomalous switching patterns of behaviour, which the trustee reasonably considers could place their membership at risk of significant detriment. The focus is not on individual switching decisions, but on systemic or emerging patterns that may indicate misconduct or heightened member detriment risk such as unusual or suspicious hikes in switching requests from vulnerable cohorts to potentially inappropriate or higher-risk environments.

The Consultation Paper identifies particular areas of concern in the context of switching activity, including erosion of superannuation balances through excessive fees (including advice fees) and rollovers from default MySuper or other lower-risk products into other superannuation funds for investment in higher-risk MISs.

While superannuation trustees are already subject to reporting obligations, including under ASIC's Reportable Situations Regime, those frameworks are directed primarily at reporting breaches or suspected breaches by the trustee itself. They are not designed to capture broader intelligence about patterns of behaviour that may signal hidden misconduct by advisers, promoters or other market participants. The proposed alerts regime is intended to fill that gap by providing ASIC with earlier visibility of concerning trends.