A watershed week for the financial services industry saw accountability come to the forefront as ASIC launched landmark legal action against a major superannuation trustee over the catastrophic failure of the Shield Master Fund. The regulator's decisive move against Equity Trustees sent shockwaves through the sector, establishing a new and assertive enforcement stance on trustee due diligence. This unfolded amid a backdrop of significant policy debate, with the Treasurer confirming a long-awaited review of the superannuation performance test. Meanwhile, the reporting season highlighted the strong performance of wealth platforms, contrasting sharply with data showing many advice practices continue to struggle with profitability. For advisers, the message from regulators is clear: expect increased scrutiny and decisive action against failures that harm consumers.
Advisers, Advice Practices and Clients
The challenge of maintaining practice profitability remains a major concern for the profession, with new research confirming the findings of the 2025 Financial Adviser Landscape Report, which show that only about half of advice practices are reporting positive earnings. This financial pressure continues even as the total number of advisers has stabilised, with a slight increase in practitioner numbers helping to support the industry in the new financial year.
In a market driven by these pressures, many firms are pursuing growth through strategic partnerships and mergers. Fitzpatricks announced a new partnership with a global entrepreneurs' network to expand its client base, while several firms on the NSW Central Coast have merged to scale their operations. This drive for scale is also evident in the expansion of in-house specialist services within advice firms.
Despite the profitability challenges for some, the importance of advice that offers more than just investment returns remains a key theme. One commentator suggested that the true value of advice lies in areas beyond portfolio performance, a view that resonates as advisers handle complex client needs. However, the shadow of past failures still looms large, with the Compensation Scheme of Last Resort (CSLR) remaining a contentious issue. The Opposition has criticised ASIC's management of the scheme, arguing that compliant advisers are being unfairly burdened with the costs of misconduct from failed firms.
The Regulatory Environment
The main story this week was ASIC's decision to sue Equity Trustees (EQT) over its role as a superannuation trustee for funds that included the collapsed Shield Master Fund as an investment option. The regulator has accused them of serious failures in due diligence and oversight, claiming the trustee did not act in the best interests of its members who invested about $160 million into the high-risk fund. ASIC has indicated this as the first of several major actions related to the Shield and First Guardian collapses, signalling a firm intent to hold all "gatekeepers"—including trustees, responsible entities, and advice licensees—to account. The fallout will be a key focus of ASIC's work in the coming year.
This tough enforcement approach was echoed across various other regulatory areas. ASIC released new data showing a sharp rise in financial misconduct, reinforcing the regulator's focus on consumer protection. The corporate watchdog has also intensified its actions against online investment scams, which continue to spread and cause significant consumer harm.
In a separate action, the anti-money laundering regulator, AUSTRAC, ordered a mandatory external audit of the global cryptocurrency exchange Binance, citing concerns about its compliance controls. This move highlights the increasing regulatory scrutiny being applied to the digital asset space. At the same time, APRA released its corporate plan for 2025-26, identifying superannuation governance, cybersecurity, and operational resilience as key priorities for its supervisory work.
The Economy, Investments & Platforms
Reporting season has delivered strong results for several key platform providers, highlighting ongoing structural changes in the advice and wealth management sector. Netwealth reported record results for the 2025 financial year, with significant increases in net flows as it continues to focus on the affluent and high-net-worth adviser segment. Praemium also experienced solid revenue growth, with its disciplined execution of strategy proving successful. Both platforms have benefited from the rising adoption of managed accounts, with new research confirming Australia's leadership in this area.
Insignia Financial has returned to profitability after a period of major restructuring and divestment, with management noting that adviser productivity has hit new highs. Meanwhile, in the market, consolidation activity persisted with Canaccord Genuity acquiring Wilsons Advisory, further consolidating the wealth management sector.
Investment trends this week continue to focus on technology and alternative assets. BetaShares highlighted strong inflows from Australian investors into the Nasdaq-100, driven by an appetite for technology and innovation. In a sign of changing times, AMP's superannuation arm is reportedly considering offering cryptocurrency ETFs as an investment option for its members. However, the shadow of recent product failures still looms over the market. Early determinations from the Australian Financial Complaints Authority (AFCA) regarding the UGC and First Guardian collapses have begun to reveal the extent of client losses.
The Superannuation & Retirement Landscape
A significant change in superannuation policy took place this week, as Treasurer Jim Chalmers confirmed the government will review the Your Future, Your Super (YFYS) performance test. While ruling out completely abolishing the test, the Treasurer acknowledged industry concerns that it might be causing unintended consequences and deterring investment in certain asset classes. The move was cautiously welcomed by industry groups like the Financial Services Council (FSC) and the Association of Superannuation Funds of Australia (ASFA), who have long called for targeted reforms.
APRA has also announced its plan to increase oversight of the superannuation sector. The regulator's new corporate plan highlights a focus on trustee expenditure, governance, and cybersecurity readiness. This comes as APRA prepares a comprehensive report on the governance failures that led to the collapse of the Shield and First Guardian funds.
Meanwhile, the industry continues to face practical and legislative challenges. Frustration is growing over delays in finalising the controversial Division 296 tax legislation for balances over $3 million, which creates uncertainty for advisers and their clients. Separately, the ATO has issued a warning to consumers about promoters encouraging illegal early access to superannuation, often for procedures like dental work.
Life Insurance & Client Protection
ASIC has warned the life insurance industry, issuing a firm directive for insurers to enhance their practices in the direct sales channel. The regulator's review identified flaws in product design, sales methods, and complaints handling, warning that enforcement action will follow against firms that fail to improve their standards. This review comes after a more than doubling in dispute rates for direct life insurance since ASIC's last major review in 2018.
Despite the regulatory emphasis on direct sales, the advised channel is experiencing some positive developments. New data shows an increase in individual risk lump sum sales, indicating a renewed focus on protection among clients. Regarding provider sentiment, a recent survey ranked Neos Life highly among advisers for its service and support.
The broader theme of product sustainability continues to be a key focus for the industry. The Actuaries Institute has published a new guide aimed at enhancing the long-term viability of life insurance products, an issue that has challenged the sector for several years.
In the Background: Key Adviser & Licensee Movements
Corporate activity remained steady throughout the week. In funds management, Salter Brothers acquired credit specialist Causeway AM, while Perpetual recorded a significant impairment related to its acquisition of J.O. Hambro. In the platform and advice space, Canaccord Genuity's move to buy Wilsons Advisory was a notable transaction. There were also several key appointments, with CareSuper adding three new members to its investments team and Global X expanding its team with an AI specialist hire.
Key Takeaways for Your Practice
Trustee Diligence as a Red Flag: ASIC's lawsuit against Equity Trustees over the Shield collapse marks a significant development. It highlights the serious responsibility of all gatekeepers in the system. For your practice, this is a time to review and strengthen your own due diligence processes for any platform or investment structure you advise on.
Prepare for Changes to Performance Testing: The government's review of the YFYS performance test is important. While the test isn't being scrapped, any adjustments to its process could impact the superannuation investment environment. Keep up to date with the consultation, as it might affect future product design and availability.
Cybersecurity and scams are top priorities for regulators: With ASIC and AUSTRAC taking firm action against scams and compliance breaches in the digital asset sector, it is essential to ensure your client communication strategies include education on scam prevention. Review your practice's cybersecurity protocols as regulatory expectations in this area continue to increase.
Direct Insurance Under Scrutiny: ASIC's warning to life insurers about direct sales might lead to significant changes in that channel. This could have knock-on effects for the wider market and could offer an opportunity to highlight the importance of professional advice in securing suitable cover for clients.
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