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Government announces reform package in response to Shield and First Guardian failures
On 19 August 2026, the Federal Government announced a package of reforms in response to the Shield and First Guardian collapses, which impacted almost 12,000 people and around $1 billion in retirement savings. The Government has stated that the reforms will address the following:
- additional protections for members of APRA-regulated superannuation funds and greater regulation of self-managed superannuation funds;
- regulation of harmful lead generation;
- enhancing governance of managed investment schemes (MISs);
- increasing financial advice protections, by progressing tranche 2 of the Delivering Better Financial Outcomes reforms; and
- changes to the Compensation Scheme of Last Resort to improve sustainability and efficiency of the scheme.
Under the reforms, responsible entities will be required to report when they freeze or limit investor redemptions and the Auditing and Assurance Standards Board will be given powers to make mandatory audit and assurance standards for auditors of MIS compliance plans.
With these reforms, the Government will not be pursuing some of the more substantial reform options proposed by Treasury earlier this year, such as requiring a majority of independent directors on responsible entity boards, and a prohibition on related party transactions (see HSF Kramer’s submissions to this earlier consultation).
The reforms also foreshadow further consultation on options to improve data collection on the MIS sector.
We expect to see more details about these proposals following the Government’s consultation with industry, consumer groups, and other stakeholders.
NSW Supreme Court imposes civil penalty on responsible entity in greenwashing case
On 11 August 2026, the NSW Supreme Court held that a responsible entity (RE) of an ESG-focused fund (the Fund) breached its duty of care and diligence and made false or misleading statements, in contravention of section 12DF of the Australian Securities and Investments Commission Act 2001 (Cth) and section 601 FC(1)(b) of the Corporations Act 2001 (Cth) following admissions by the RE of the contraventions.
The case is the first ASIC greenwashing case brought against a RE for failures in governance, compliance and oversight of ESG claims and this case is the first greenwashing-related civil penalty outcome in relation to a RE’s failure to uphold its duty to act with care and diligence.
The RE stated in the Fund’s (six) product disclosure statements that it would monitor the Fund to ensure its investments were consistent with statements about the Fund’s ‘ethical’ or ‘socially responsible’ investment objectives (ESG Statements).
The Fund invested in underlying funds which, between October 2019 and May 2024, held investments in companies that derived revenue wholly or substantially from fossil fuels (and other non-ESG categories of investments).
The Court found that the RE did not have reasonable grounds to make the ESG Statements and that the statements were misleading. The Court also found that the RE had committed governance and oversight failures by failing to:
- adequately monitor and change the Fund’s underlying investments for alignment with the ESG Statements;
- review the investment strategies of the underlying funds; and
- amend the Fund’s stated investment objectives to align with its actual investments.
The Court ordered the RE to pay a civil penalty of $7.3 million (an amount which had been agreed by the parties).
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