Assistant Treasurer and Minister for Financial Services Daniel Mulino has outlined a broad reform agenda for the financial advice sector, signalling tougher preventive measures, better use of technology and systemic reviews of compensation settings as pressures mount from major investment scheme failures.
Addressing the FAAA Congress in Perth Mulino said the Shield and First Guardian collapses, potentially involving losses of more than $1.2bn, revealed failures “at multiple points” across the ecosystem.
He stressed the need for holistic reform, noting issues spanning originators, platforms, product manufacturers, managed investment schemes, and some advisers. While urging caution given ongoing court matters, he said the events underscored vulnerabilities in oversight, due diligence, and consumer protection.
Mulino confirmed his office is exploring stronger onboarding and due-diligence requirements for platforms, capital standards for managed investment schemes, and enhanced data-sharing arrangements to detect problematic flows earlier.
He described the regulatory environment as an “arms race” in which perpetrators are leveraging technology, demanding more proactive information exchange between industry and regulators.
…bad actors are often not around to pay…
Compensation arrangements for consumers, now under strain from escalating CSLR liabilities remain a major challenge, he said.
Mulino acknowledged the frustration advisers feel at bearing levies for misconduct by a small minority, but warned that in any compensation regime “bad actors are often not around to pay”.
He said he will announce the 2025–26 special levy “within weeks” but emphasised that broader, longer-term reforms must prioritise prevention to avoid unsustainable compensation burdens.
Mulino also highlighted adviser shortages as a structural threat, saying adviser numbers must stabilise and ultimately grow to meet the needs of an ageing population.
He signalled continued work on more flexible education standards, along with the Delivery Better Financial Outcomes reforms, although drafting complexities are slowing progress.
He framed the sector as critical to Australians’ financial wellbeing and said technology and AI offer significant opportunities to make advice more accessible and efficient. He committed to close collaboration with industry as reforms take shape.
Daniel Mulino’s six principles:
- Consumers must be able to invest in the superannuation system with confidence
- Collapses like Shield and First Guardian reflect failures across an interconnected ecosystem, requiring holistic, system-wide solutions
- Regulation should be targeted at bad actors and minimise the burden on those doing the right thing
- Choice for consumers is important, but it must be supported by appropriate guardrails.
- Technology and better information-sharing should be used to strengthen prevention and detect problems earlier
- Compensation mechanisms are essential but complex, and must be strengthened alongside prevention
