The Australian superannuation sector is currently navigating a period of significant regulatory evolution and strategic recalibration. This week’s developments underscore a continued focus on transparency, member outcomes, and the industry’s adaptation to a dynamic economic and legislative environment. Key themes include ongoing debates around the Division 296 superannuation tax, critical regulatory guidance on cybersecurity and advice fees, and notable movements within the sector's leadership.
Regulatory Landscape & Compliance Challenges
Regulatory bodies continue to shape the operating environment for financial services. The Australian Securities and Investments Commission (ASIC) has granted a limited no-action position regarding deficient advice fee written consents, providing financial advisers and superannuation trustees until 5 September 2025 to comply with ongoing fee arrangement (OFA) client consent requirements. This temporary relief, outlined in an ASIC media release, addresses industry concerns about the inclusion of account numbers in written consents. However, it does not prevent OFA termination if consent remains non-compliant. Firms must ensure new OFAs with all required details are in place by the deadline.
In parallel, the Australian Prudential Regulation Authority (APRA) has intensified its focus on information security within the superannuation sector. Following recent credential stuffing attacks, APRA has written to all Registrable Superannuation Entity (RSE) licensee board chairs, reinforcing expectations on robust authentication controls. As detailed in an APRA news release, RSE licensees are now expected to conduct self-assessments of their information security controls, implement multi-factor authentication (MFA) for high-risk activities, and promptly notify APRA of any material control weaknesses or breaches. This proactive stance highlights the increasing importance of cybersecurity resilience in protecting member data and financial stability.
The Division 296 Tax: Implications and Industry Response
The proposed Division 296 tax, targeting superannuation balances exceeding $3 million, remains a contentious issue. Treasurer Jim Chalmers has affirmed the government’s intent to proceed with taxing unrealised capital gains on these large balances, defending it as a measure to enhance the fairness and sustainability of the superannuation system. According to Chalmers, the tax would impact only approximately 0.5% of superannuation accounts, with tax liabilities deferred until the pension phase.
However, industry bodies like the Financial Services Council (FSC) have voiced significant concerns. In its latest policy update, the FSC projects that potentially up to 500,000 Australians could be affected by the tax if the $3 million threshold is not indexed, a figure considerably higher than the government’s estimate. For Self-Managed Superannuation Funds (SMSFs), the tax poses a particular challenge as SMSF trustees could face a "double whammy," where they are taxed on unrealised gains under Division 296 and then again via capital gains tax (CGT) when the asset is eventually sold. This is because the Division 296 tax is levied on the individual, not the fund, preventing the application of any CGT credit against the initial liability. The lack of indexation and the treatment of unrealised gains continue to be central points of industry advocacy.
Client Needs, Retirement Advice, and Industry Evolution
The growing need for accessible and affordable retirement advice is a critical area of focus. Industry experts David Bell and Geoff Warren argue that collectively charged financial advice provided by super fund trustees — often called "advice through super" — will be substantially better than no advice. They support the Delivering Better Financial Outcomes (DBFO) Tranche 2 reforms as a means to address the advice gap, particularly given the limitations of traditional advice models concerning supply and cost. Their analysis suggests that while not perfect, advice through super, if implemented effectively with considerations for member objectives, offers a pragmatic solution for the millions approaching retirement.
Reinforcing this perspective, State Street’s Global Retirement Reality Report 2025 indicates a strong correlation between financial advice and retirement confidence. 64% of advised Australians are optimistic about being financially prepared for retirement, significantly higher than the 25% of their non-advised counterparts. The report also highlighted a persistent gender gap in retirement optimism and the propensity for women to hold fewer investments outside of superannuation. These findings underscore the tangible benefits of financial guidance and the ongoing need for initiatives that expand access to advice.
Industry Movements: Strategic Shifts and Leadership Appointments
The financial services sector continues to see strategic consolidations and significant leadership changes. Novigi, a data and technology services specialist, has expanded its capabilities by acquiring the Iress Superannuation and Consulting Managed Services business from Apex Group. This acquisition involves over 100 superannuation consulting and technology services consultants joining Novigi, bringing its total headcount to nearly 400. The move aims to enhance data and technology solutions, member services, and administration capabilities within the superannuation ecosystem.
In the realm of executive appointments, HESTA has announced that its chief risk officer, Andrew Major, will transition into a newly created advisory role to work on the fund's investment strategy and Ruvimbo Tagwira has been appointed as interim risk executive as the fund searches for a permanent replacement. Meanwhile, Rest has appointed Simone Van Veen as its new Chief Member Officer, following a six-month search. Van Veen brings over 25 years of financial services and banking experience, with a strong focus on member experience and digital solutions, aligning with Rest’s ambition to simplify super for its two million members.
A significant governmental appointment also occurred with Jenny Wilkinson named as the new Secretary to the Treasury. Wilkinson becomes the first woman to hold this pivotal position. She replaces Steven Kennedy, who transitions to the role of Secretary of the Department of the Prime Minister and Cabinet. This leadership change marks a historic moment for the Treasury and reinforces the government's commitment to diverse leadership in key economic institutions.
Looking Ahead & Takeaways
The coming months will continue to test the adaptability of Australia's financial services industry. The progression of the Division 296 tax legislation and the industry’s ongoing advocacy for threshold indexation will remain a focal point. Furthermore, regulatory scrutiny on operational resilience and cybersecurity will intensify, prompting funds to bolster their digital defences and compliance frameworks. The debate surrounding financial advice models, particularly "advice through super," is expected to evolve as the industry seeks scalable solutions to address the burgeoning retirement advice gap.
Key Takeaways:
- For Product Providers & Licensees (Short-term, 0-3 months): Prioritise immediate compliance with ASIC’s updated ongoing fee consent requirements, ensuring new OFAs with complete details are in place by 5 September 2025 to avoid termination of arrangements and potential regulatory action. Simultaneously, review and strengthen cybersecurity authentication controls as per APRA's reinforced expectations to mitigate evolving cyber threats.
- For Advisers (Short-term, 0-3 months): Leverage the ongoing debate and client concerns surrounding the Division 296 tax to engage high-net-worth clients on bespoke superannuation strategies. Proactively communicate the tax implications, especially regarding unrealised gains for SMSFs, and explore strategies to minimise adverse impacts.
- For Superannuation Funds (Medium-term, 3-12 months): Actively participate in consultations and discussions regarding the indexation of the Division 296 tax threshold. Concurrently, continue to invest in and refine digital advice capabilities and client engagement models to meet the growing demand for affordable retirement advice, as highlighted by the benefits of "advice through super."
- For Industry Stakeholders (Medium-term, 3-12 months): Monitor the impact of new leadership appointments within key regulatory and government bodies, such as the Treasury, as these changes may influence future policy directions and regulatory priorities. This understanding is crucial for anticipating shifts in the operating environment.
