Enhancing safeguards & governance in the managed investment scheme sector
23/02/2026
Treasury has released a consultation paper outlining wide-ranging proposals to strengthen governance and oversight across Australia’s $2 trillion registered managed investment scheme (MIS) sector. The proposed reforms would materially reshape MIS governance, introducing higher compliance standards, greater board independence, reduced related party risk, and increased regulatory visibility to enhance accountability and investor protection.
The proposals respond to ongoing governance concerns and recent high-profile scheme collapses, most notably the Shield Master Fund and the First Guardian Master Fund. Together, they placed more than $1bn of investor funds at risk. The Australian government is considering reforms aimed at reducing consumer harm, strengthening responsible entity (RE) accountability, and improving Australian Securities & Investments Commission’s (ASIC) visibility over scheme activities, superannuation switching, and sector-wide risks. Treasury is seeking feedback on these proposals, with submissions due by 27 February 2026.
The paper sets out 6 consultation points for feedback from the industry
1. Strengthening the compliance framework
- Stricter compliance plan requirements, including detailed scheme descriptions and significant risk controls.
- Liability for compliance plan breaches limited to material contraventions.
- Mandatory use of existing audit and assurance standards for compliance plan audits.
- REs to notify ASIC of appointment or resignation of compliance committee members.
2. Majority of external directors on responsible entity boards
- RE boards would be required to have a majority of external directors, eliminating the alternative option of a mandatory compliance committee.
3. Prohibition on related‑party transactions (with limited exceptions)
- REs would be prohibited from investing in or lending to related entities unless an exception applies. This responds directly to identified misconduct in past MIS failures.
- A potential solution outlined would be to outsource the RE function such that it is independent of the investment manager.
4. New framework for financial resource requirements
- ASIC considering higher net tangible asset (NTA) requirements.
- Treasury is seeking feedback on whether these requirements should be set out in legislation rather than in ASIC instruments.
5. Increased ASIC MIS data collection powers
- New recurrent and event‑based data reporting to address current gaps in MIS‑level visibility.
6. Alerts to ASIC about superannuation switching
- Mandatory alerts from superannuation trustees regarding suspicious switching activity, aimed at early detection of misconduct.
Who is impacted
| Stakeholder group | Likely impact |
|---|---|
| Responsible entities | Increased governance obligations, higher costs associated with external directors and compliance uplift, and potential changes to financial resource requirements. |
| Investment managers | Additional scrutiny of structures involving related party arrangements and a possible need to restructure existing arrangements. |
| Superannuation trustees | The introduction of new mandatory reporting obligations for suspicious switching patterns. |
| Retail investors | Stronger consumer protection and clearer oversight of investment structures. |
| Auditors of MIS compliance plans | Mandatory application of assurance standards and the potential expansion of quality requirements. |
How SW can help
SW brings deep financial services expertise with a strong focus on funds management and regulated investment structures. We work closely with responsible entities, investment managers, and trustees to navigate complex regulatory change and evolving governance expectations.
Our team can assist in assessing the impact of the proposed reforms on your governance framework, board composition, compliance plans, and related party arrangements. We also advise on financial resource requirements, capital implications, and enhanced reporting obligations, helping you strengthen risk management and internal controls in line with heightened regulatory scrutiny.
With integrated audit, assurance, risk, and advisory capabilities, we provide practical, commercially focused guidance to help you respond effectively to these reforms.
