The Australian Securities and Investments Commission (ASIC) has issued a warning about risks in Australian platform super funds, highlighting concerns over trustee oversight, advice fees, and protections for retirement savings.
In a comprehensive 29-page report titled “Safeguarding super: How well are platform trustees monitoring risks to retirement savings,” the corporate watchdog asserts that superannuation trustees are failing to adequately protect members from harmful financial practices and excessive fees.
The report comes at a critical time for the financial sector, following the high-profile collapses of the Shield Master Fund and First Guardian Master Fund. These failures resulted in an estimated $1 billion loss in retirement savings for more than 11,000 Australians, events ASIC has categorized as “industrial-scale misconduct.” Commissioner Simone Constant has urged all superannuation trustees to immediately review their operations to prevent further risks from translating into severe financial harm for working Australians.
ASIC Finds Gaps in Superannuation Advice Fee Controls Across Platform Funds
A primary focus of the ASIC investigation was the monitoring of advice fees and the controls placed on deductions from member accounts. ASIC reviewed six platform trustees managing approximately $300 billion in retirement savings—representing about three-quarters of the total funds managed by platform trustees.
The findings revealed persistent and significant gaps in how advice fee controls are managed, with some areas showing regression over the last two years.
One of the most concerning discoveries was the inadequacy of fee caps. While trustees are responsible for setting these caps to prevent high fees from eroding low super balances, ASIC found the current approaches insufficient.
For instance, one trustee proposed a fee cap of $30,000, a figure the regulator deemed well beyond acceptable limits. Without strict caps, there is a significant risk that members with smaller balances could see their retirement savings diminish due to disproportionate costs.
Superannuation Trustees Fail to Monitor Key Risk Indicators, ASIC Finds
The regulatory review highlighted a systemic failure in the oversight of advice documents and the business models of advice licensees. ASIC found that half of the reviewed trustees failed to conduct any checks on advice documents for at least one month during the review period.
In one extreme case, a trustee performed only 21 checks on advice, yet 75% of those checks resulted in adverse findings, underscoring the high risk associated with low monitoring volumes.
Beyond documentation, the watchdog identified a failure to monitor “key risk indicators” that could signal misconduct or instability. These include:
- Member Churn: Unusual patterns in members leaving or joining funds.
- Investment Flows: High-risk superannuation switching activity and irregular fund movements.
- Third-Party Referrals: Insufficient understanding of whether advice licensees are using lead generators or other third-party referral sources.
- Holding Limits: Inadequate monitoring of asset holdings within the platforms.
Platform Super Funds Grow to $396 Billion as Oversight Concerns Increase
The urgency of these safeguards is amplified by the extraordinary growth of the platform superannuation industry.
Between June 2015 and June 2025, member benefits in platforms surged from $123 billion to $396 billion—a more than threefold increase. This growth has significantly outpaced the broader superannuation sector.
Alongside the increase in assets, the costs associated with managing these funds have skyrocketed. Advice fees charged from superannuation platforms increased fourfold during the same period, reaching a total of $2.2 billion.
This surge in fees, coupled with the reported lack of oversight, creates a fertile environment for the “erosion” of member funds if not strictly managed.
Australians Relying on Social Media for Superannuation Advice as Financial Adviser Numbers Fall
While ASIC focuses on the institutional failures of trustees, the Association of Superannuation Funds of Australia (ASFA) has highlighted a growing crisis in how Australians access financial information.
Research indicates a worrying trend among younger generations, with those aged 18 to 34 being ten times more likely than those over 65 to consult social media for retirement information.
Despite social media being ranked as the least trusted source of retirement information, ASFA CEO Mary Delahunty suggests this is a symptom of a larger structural problem: the lack of affordable and accessible professional advice.
The number of licensed financial advisers has dropped by approximately 40% over the last decade, while the number of Australians with super accounts has increased by 20%. This gap makes it harder for individuals to find trustworthy, professional guidance, pushing them toward unreliable online sources.
How to Check Your Superannuation Fees, Performance, and Investment Safety
Given the risks identified by ASIC and the inherent dangers of “industrial-scale misconduct,” experts recommend that all Australians take a proactive approach to their retirement savings. Commissioner Simone Constant encouraged citizens to “engage with your super as you do with your banks.”
For those invested in platform super funds or wrap accounts, it is essential to perform regular checks to ensure the fund is acting in their best interest. Key steps for a super health check include:
- Reviewing Fee Statements: Identify exactly how much is being deducted in advice fees and compare these against your total balance.
- Analyzing Performance: Check the fund’s returns against industry benchmarks and other retail or industry funds.
- Verifying Advice Documents: Ensure that any investment switches or changes were supported by a Statement of Advice (SOA) and are aligned with your risk profile.
- Comparing Fund Types: Evaluate whether a standard industry or retail fund might offer lower fees and better performance than a specialized platform or wrap account.
Frequently Asked Questions
What is a platform super fund in Australia?
A platform super fund, sometimes called a wrap account, is a type of superannuation structure that allows financial advisers to manage a wide variety of investments within a single account. While they offer flexibility, they can often carry higher fees than standard industry funds.
Why is ASIC concerned about advice fee caps?
Fee caps are designed to prevent a situation where the cost of financial advice exceeds the growth of the account. If caps are too high, particularly for members with low balances, the fees can effectively “wipe out” or erode the retirement savings over time.
What happened with the Shield and First Guardian funds?
The Shield Master Fund and First Guardian Master Fund suffered collapses linked to what ASIC described as “industrial-scale misconduct.” These events led to the loss of approximately $1 billion in retirement savings for over 11,000 Australians.
How do I check if my super fund fees are too high?
You should review your annual member statement and look for “advice fees” or “platform fees.” If these fees are taking up a significant percentage of your annual earnings or if you are not receiving a clear service in exchange for the cost, you should consult a licensed financial adviser or consider switching funds.
Are all superannuation trustees failing to protect members?
No. ASIC clarified that while many individual trustees do the right thing, the data from the reviewed platforms showed systemic weaknesses that require immediate attention to prevent widespread harm.
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