The Albanese government is weighing a controversial overhaul of the Compensation Scheme of Last Resort, proposing that over half a million self-managed super funds be excluded from fraud compensation unless they agree to fund the programme.
The move follows the catastrophic $1 billion collapse of Shield and First Guardian, which has left the scheme groaning under a projected $200 million funding gap for the next financial year.
Under the proposal, SMSF members—who currently account for 93% of all paid and pending claims—must either opt-in to pay a special levy or forfeit their right to seek redress.
Assistant Treasurer Daniel Mulino noted that the current "ecosystem of misconduct" requires a sustainability rethink, especially as industry super funds were recently tapped to cover a $47.3 million shortfall.
The government is also flagging a mandatory five-day waiting period for members wishing to switch products.
The "cooling-off" window allows current funds to warn members of "relevant risks", a move intended to thwart aggressive lead generators who frequently pressure Australians into risky SMSF structures.
Further reforms include doubling fines for investment platforms that fail to perform adequate due diligence on hosted products and mandating financial services licences for lead generation firms.
While the retail sector is expected to oppose the switching delays, the Treasury maintains that these measures are essential to protect retirement savings from the "dodgy" advisers responsible for the recent surge in financial ruin.