Govt takes aim at cold callers as big super lashes compo scheme levy
Lead generators could need to be licensed under a suite of reforms being mulled by the Albanese government following the Shield and First Guardian collapses.
Lead generators may need to be licensed under a raft of reforms of the heavyweight financial sector being mulled by the Albanese government.
There are also plans to impose delays for those moving their superannuation into less regulated parts of the market.
Assistant Treasurer Daniel Mulino announced the plans on Wednesday after telling a room of superannuation industry figures their sector will pay millions of dollars to prop up the ailing Compensation Scheme of Last Resort.
Among the reforms Labor will canvass in the new year will be the lead generation industry, which was critical in the Shield and First Guardian scandals that have rocked the industry.
Dr Mulino said Labor would look at whether licensing was required for lead generation firms or whether there had to be “certain disclosure requirements”.
“But acknowledging that it’s not a straightforward sector to regulate,” he said.
“I think we need to step back and have a look and consider whether we need to put some sand in the wheels, much like we’re doing with scams.”
Dr Mulino said there was a need for protection for those switching their super savings to less regulated investment options.
“People need to be able to take their time and not be rushed,” he said.
“We want people to have choice, but I’m also very conscious that we need to ensure that people aren’t rushed.”
Dr Mulino also said Labor was looking at requiring more reporting to the corporate regulator from funds.
The Australian Securities & Investments Commission has warned it needs more insight into the performance and assets of managed investment schemes.
The assistant treasurer also said the government would soon publish its response to Netwealth’s request for assistance, in the wake of the scandals, after calling on taxpayers to meet a looming cash call from a potential regulatory penalty.
Dr Mulino said the Labor government wanted to ensure the Compensation Scheme of Last Resort is “fit for purpose”, noting the latest $47.3m cost was a reflection of a blowout from the almost 12,000 retirees caught up in Shield and First Guardian.
But the Labor minister said the government was looking at ways to make the CSLR sustainable going forward, noting the scheme should be “contributed to as widely as possible”.
“There’ll be a number of sectors who we will say are to be included,” he said.
This could potentially include managed investment schemes and even self-managed super funds, although that would require legislative change.
Super funds on Wednesday lashed the federal government for forcing them to stump up millions of dollars for the CSLR even though their members cannot access the scheme.
Dr Mulino on Wednesday dragged the $3 trillion APRA-regulated super industry into the botched CSLR, forcing the sector to contribute to a special levy to meet a $47m funding shortfall for the 2026 financial year.
But the industry fears it will be on the hook for millions of dollars more as costs blow out in the years to come, with the under-pressure scheme already deemed unsustainable in just its second year of operation.
“It sets a dangerous precedent and is grossly unfair,” Association of Superannuation Funds of Australia chief executive Mary Delahunty told The Australian.
“Including super in the CSLR, forcing 18 million super members to pay into a compensation pot they can never claim from, is an untenable option,” she said.
Dr Mulino said the super industry would be required to pay 12.9 per cent of the $47.3m funding shortfall the CSLR is facing this year, despite all of the funding gap coming from claims against dodgy financial advice.
The blowout is only set to worsen in the years to come, with initial estimates for 2027 indicating a funding shortfall of $100m. That does not include claims from investors caught up in the Shield and First Guardian scandals, who collectively put $1bn into the two failed schemes.
“The 2026 special levy will be spread widely across subsectors to stabilise the scheme in the immediate term and avoid overwhelming any single part of the industry,” Dr Mulino said.
“It is the responsible choice for now, but it does not fix the underlying problems that have driven the CSLR into this position so early in its life.”
The CSLR was set up in the wake of the banking royal commission to act as a last-resort support for victims of financial misconduct. It provides for a maximum payout of $150,000 if the financial firm responsible for the wrongdoing cannot pay up for reasons such as insolvency.
The scheme is funded with an industry-wide levy on financial advisers, banks and other lenders, and stockbrokers. Crucially, super funds and managed investment schemes were excluded from the levy when it was set up in 2023.
But these sectors will now be brought into the fold, at least for the short term, with super funds contributing up 12.9 per cent of the $47m shortfall and responsible entities paying 13.7 per cent. Credit providers such as banks are responsible for 15 per cent of the levy, while advice licensees will pay the most, at 22 per cent. The remainder will be spread across a number of other subsectors that will each pay less than 10 per cent of the shortfall.
A financial services industry roundtable in Sydney on Wednesday saw representatives push the minister for assurances they won’t be footing the CSLR bill for the long term.
Lobby group Super Members Council urged the government to rethink its proposal, warning it would drag low-income Australians with super into paying for growing dangers elsewhere.
“We strongly oppose pushing the bill onto low and middle-income Australians who have chosen the safeguards of the highly regulated super system to pay for misconduct in other high-risk financial products,” Super Members Council CEO Misha Schubert said.
“We urge the Government to stop and rethink these issues to avert a grave escalation of moral hazard.”
“The design of this scheme needs to be reviewed carefully to avoid making the current problems and perverse incentives worse.”
“It’s crucial to slam the door shut to stop consumers being harmed in the first place. Prevention is always better than clean up.”
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Originally published as Govt takes aim at cold callers as big super lashes compo scheme levy
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