Switching advice must be supported by a clear rationale, grounded in the client’s best interests and able to demonstrate a net benefit after fees.
Superannuation switching – so hot right now
Superannuation switching is arguably the hottest topic in financial advice right now.
It is at the centre of narratives around high-profile advice and product failures, changes to the Compensation Scheme of Last Resort (CSLR), the evolving landscape of competitive superannuation flows, and regulatory reform priorities. It is the subject of a very public battle between advocates for industry funds and retail providers, and it has fuelled widespread coverage through both trade and mainstream media.
The potential for consumer harm from inappropriate switching was already on ASIC’s radar following the release of Rep 781 in 2024[1], and recently heightened regulatory and policymaker scrutiny has culminated in the April 2026 release of Treasury consultations[2] on proposed reforms impacting super switching and lead generation.
This article examines the key dynamics within this issue, including the drivers of increased switching and the consumer risks identified by regulators. It also frames potential regulatory outcomes and suggests practical steps advisers can take to ensure their switching advice remains compliant and robust in the face of likely reforms.
Super switching is big business
To truly understand why superannuation switching is now receiving so much media attention and regulatory focus, it is necessary to appreciate the broader industry context around superannuation flows and retirement trends.
The compulsory nature of Australia’s superannuation system has underpinned its remarkable growth. As the superannuation savings pool has grown (it now exceeds $4.5 trillion[3]), it has collided with our ageing population to create a ‘silver tsunami’ of Australians who are retiring with (1) higher superannuation balances than ever before, and (2) more need for advice to navigate an increasingly complex retirement income system.
The combination of these forces has in turn driven an increase in switching activity between funds. Some of this switching is self-directed, as members are forced out of funds failing the APRA performance test, or as they heed messages about fund consolidation to reduce fees. Other switching is driven by advisers seeking to place their clients in funds offering better performance, wider options, more responsive service and greater transparency.
In the case of advisers, many are finding the superannuation offerings of leading retail platforms to be superior to many large incumbent funds, powering a flow of funds away from legacy master trusts and industry funds. The 2026 State of Super report[4] from the Conexus Institute, alongside various media reports, speaks to the scale of this trend, and provides a more precise view of how these flows are occurring.
The report estimates that around $40b of switching activity – or approximately 52% – involved a financial adviser, with a significant proportion of switches directed toward leading retail platforms including Hub24 and Netwealth. At the same time, several large industry funds, including Australian Super, ART, HESTA, and Rest, are experiencing competitive net outflows, as are for-profit master trusts including AMP Super, Insignia, and Mercer.
The potential for adverse switching outcomes was already on ASIC’s radar
As the size of the superannuation pool increases, so too does the number of businesses attracted to the sector and its revenue potential. Sadly, not all these businesses will be compliant and customer focused, a point which has been recognised by ASIC for some time, and which was reinforced by their review of superannuation trustee practices, published as Report 781[5].
Released in May 2024, ASIC’s Report 781 identified a range of concerns, including in relation to advice fee deductions and harmful switching activities, particularly where member balances were eroded by inappropriate advice charges.
The report specifically highlighted the role of “high-pressure, cold calling for superannuation switching business models”, noting that these practices were associated with:
- unnecessary, generic or inappropriate advice
- switching into unsuitable superannuation products
- poorer retirement outcomes for members.
ASIC identifies poor conduct by advisers and licensees as central to consumer harm. However, it also made clear that the way trustees oversee advice fee deductions can either mitigate or allow these risks to persist.
Such oversight could include
- proactive checks of advice documents
- the use of appropriate fee caps and
- consent controls and more active monitoring of advisers and licensees.
Recent high profile fund failures are the catalyst for even more scrutiny
Two recent high-profile fund failures[6] have proved to be the catalyst for further heightened regulator and media scrutiny of superannuation switching practices.
A central feature of these failures was the role of lead generators in identifying and targeting prospective clients, often through cold-calling or digital acquisition strategies, and encouraging them to switch into higher-risk investment structures with the promise of superior returns. In many cases, these interactions formed part of a broader distribution chain involving marketing firms, referral partners and authorised representatives.
These third-party lead generation models typically attract consumer interest through offers such as a ‘free super health check’, retirement readiness tools or comparison-style calculators. While these gamified propositions can appear educational or informational in nature, they can in practice form part of a structured lead-harvesting process designed to direct consumers toward a particular advice provider or product.
In its March 2026 announcement[7] of a formal review into the use of lead generation by advice licensees, ASIC made clear that its concerns extend beyond isolated instances of poor advice, to the broader ecosystem through which clients are acquired. This includes the role of follow-up engagement practices, including outbound calling and high-pressure sales tactics, which can move consumers rapidly from initial enquiry to switching decisions. When combined with inadequate advice processes, these models increase the risk that members are transferred into new superannuation arrangements without a clear and demonstrable benefit.
(The depths of ASIC’s concern about this sector were further highlighted when they simultaneously announced their intention to publish a register of advice licensees using lead generation services[8].)
Switching and consumer protection becomes the regulatory priority
The understandable outrage caused by these fund failures, and the life-altering harm they caused to affected investors, has prompted a strong response from across the industry and among policymakers.
The Superannuation Members Council, for example, representing industry funds, has sought to highlight concerns in respect of superannuation switching more broadly[9]. Their position – including analysis suggesting that switching among younger members may often be to their detriment – has been the subject of much discussion and debate across the industry[10].
Regardless of the veracity of their claims, concerns around superannuation switching as a potential source of consumer harm have clearly gained traction among policymakers at the highest levels and are already influencing policy direction.
DBFO Tranche 2 put on the backburner
Perhaps the most visible example of this influence can be seen in the Federal Government’s recently revised financial services reform agenda.
In early 2026, Financial Services Minister Daniel Mulino indicated that his regulatory focus would shift toward addressing poor consumer outcomes linked to advice, lead generation and superannuation flows[11]. While broadly welcomed at a community level, for advisers this shift has had a clear consequence, with the overdue Tranche 2 of the DBFO now a lower priority and delayed.
During a recent adviser webinar, FAAA CEO Sarah Abood commented on her dealings with the Minister, saying she didn’t believe the reforms are dead but that “DBFO appears to be further back in the queue”[12].
This change in focus is already evident, with April 2026 seeing Treasury release two consultations for proposed legislation directly impacting switching activities:
- “Enhancing member protections in the superannuation system”[13]
Changes considered include limits on the deduction of fees from super when switches are involved, and the introduction of a cooling-off period for switches. - “Curbing lead generation activity”[14]
Examining the role of third-party marketing firms, referral arrangements and client acquisition models in initiating switching activity.
(A third consultation was released at the same time, addressing changes to the CSLR).
Proposed switching advice reforms: the consultations in detail
The two Treasury consultations highlighted above make it clear that superannuation switching is now being treated as a system-level concern, spanning advice quality, distribution practices and trustee oversight. Each is explored in more detail below.
Consultation 1: advice fees to be prohibited where switching is involved?
Here Treasury proposes mechanisms to protect members from adverse switching outcomes, including a cooling-off period and prohibiting or limiting the deduction of fees from super where switching is involved.
Key reforms proposed include:
- Introduce a waiting period for inter-fund superannuation switching
Require members to formally confirm their request to switch within a mandated waiting period (for example 5 days). - Limit fee deductions for switching-related financial advice
Options include total prohibition of fee deductions for switching related advice (requiring clients to pay out of pocket), targeted prohibition (for example based on age or balance thresholds), fee caps, or requiring trustees of the receiving fund to review fee deductions in line with members’ best financial interests.
Other proposals include strengthening platform governance, increasing penalties under the SIS Act, and a requirement for trustees to compensate members for eligible losses.
Consultation 2: Lead generation – scrutiny of client acquisition models
These proposals reflect a growing concern that poor consumer outcomes can originate well before advice is formally provided.
Key changes put forward include:
- Regulation of lead generation activity
Options include bringing prescribed lead generation activities within the financial services regulatory framework or banning certain unlicensed communications to consumers about superannuation. - Accountability of advisers and licensees
Proposals include enhancing the accountability of licensees for the conduct of lead generators and clarifying how existing obligations apply where clients are referred through these arrangements. - Extension of anti-hawking requirements
Looks at options to strengthen anti-hawking protections, including conditions around consumer consent and limits on unsolicited contact. - Remuneration structures linked to referrals
Options include capturing lead generators under the conflicted remuneration framework or clarifying the scope of benefits that may incentivise poor conduct. - Advertising and disclosure requirements
Canvases additional measures to improve transparency, including requirements relating to financial advertising and earlier regulatory intervention.
Compliant switching advice – a refresher
ASIC Info Sheet 182[15], first published in 2013, sets out how advisers should approach superannuation switching advice in practice, containing detailed guidance and practical tips.
Ahead of any of the abovementioned proposed reforms becoming law, advisers may find it useful to refresh their knowledge of ASIC’s expectations in this area of advice.
1. What is super switching advice?
Super switching advice refers to personal advice given to a retail client about:
- transferring an existing super balance (in whole or part) to another fund
- redirecting future contributions from one fund to another.
Advisers must consider the substance of the advice, including:
- verbal discussions
- Statements of Advice (SOAs)
- Financial Services Guides (FSGs)
- other written communications.
ASIC assesses the overall impression created by the advice.
Compliance tip
In ASIC’s surveillance, they will look closely at the files of advisers who seem to have a number of clients who only want advice about the ‘to’ fund, although they are still eligible to remain in their ‘from’ fund.
2. Satisfying the best interests duty
Super switching advice must satisfy all elements of the best interests duty.
This requires advisers to:
- Make reasonable inquiries into the client’s relevant circumstances, including:
- age, dependants and retirement objectives
- financial needs and goals
- insurance requirements
- existing super and investments
- tax position
- risk tolerance and financial literacy.
- Investigate and understand the subject matter of the advice, including:
- both the existing (‘from’) fund and proposed (‘to’) fund
- the consequences of switching.
- Provide advice that is in the client’s best interests.
ASIC states that switching advice will generally be inappropriate where:
- the overall benefits of the ‘to’ fund are likely to be lower than the ‘from’ fund, unless outweighed by cost savings
- the ‘to’ fund has higher costs without a clear basis that it better meets the client’s needs.
Compliance tip
Where advisers recommend switching, but there is no obvious overall advantage to the client in making the switch, ASIC is more likely to look closely at the disclosure given to the client about conflicts, fees and the basis for the advice.
3. Information about the ‘from’ fund
Advisers must obtain and consider relevant information about the client’s existing fund.
Sources may include:
- Product Disclosure Statements and product dashboards
- member statements and annual reports
- fund websites or direct contact with the trustee
- independent research.
If sufficient information cannot be obtained, the adviser should seek the information directly or decline to provide switching advice.
Compliance tip
Switching advice cannot be provided without sufficient information about the ‘from’ fund, and a lack of client-provided information does not remove this obligation.
4. Statement of Advice requirements
For all super switching advice, the SOA must clearly explain:
- the costs of the recommendation
- the benefits of the recommendation
- the significant consequences of acting on the advice.
This applies to both full balance transfers and the redirection of future contributions.
Examples of inadequate disclosure include:
- statements that fees are higher without quantifying the difference
- references to “better features” without explaining what they are and why they are relevant
- generic statements about potential loss of insurance without detail.
Compliance tip
It might be misleading to describe a feature of the ‘to’ fund as a benefit of making the switch unless that feature satisfies a client’s needs or objectives and is not already available in the ‘from’ fund.
5. Insurance considerations
Advisers must consider the impact of switching on insurance arrangements.
This includes:
- identifying existing cover in the “from” fund
- assessing whether equivalent cover is available in the “to” fund
- explaining any loss, reduction or change in cover
Compliance tip
Disclosure must go beyond stating that “if you have insurance, you will lose it if you switch”.
Advisers should explain:
- the level of cover
- cost implications
- impact on the client.
6. Advice involving SMSFs
Where switching involves establishing an SMSF, advisers must consider:
- the client’s ability to act as trustee
- financial literacy and understanding of obligations
- time and resources required to manage the fund
- ongoing costs
- availability and cost of insurance.
Clients must also understand that SMSFs do not have the same protections as APRA-regulated funds
Compliance tip
ASIC will look for instances where an adviser has:
- advised a client to establish an SMSF when their current super savings are insufficient and their circumstances do not otherwise support the advice; or
- failed to advise a client properly about ongoing costs (at least in very broad terms, based on average costs) and the time and skill needed to administer an SMSF.
7. Use of disclaimers
Disclaimers may be used to define the scope of advice in limited circumstances. However, disclaimers do not remove an adviser’s obligation to:
- make reasonable inquiries into the client’s circumstances
- investigate the subject matter of the advice
- ensure the advice is appropriate
Compliance tip
Even if a disclaimer says, ‘this is not advice about the ‘from’ fund’, this disclaimer will not let you limit your consideration to the ‘to’ fund if the substance of your advice is or includes a recommendation to switch.
Practical application of INFO 182
ASIC’s position is that switching advice must be supported by a clear, evidence-based rationale.
In practice, this requires advisers to demonstrate:
- a comparison of the ‘from’ and ‘to’ fund
- a clear explanation of costs and benefits
- consideration of insurance and other consequences
- a documented basis for concluding the client is better off.
Where these elements are not present, the advice is likely to be considered inappropriate.
Additional considerations in light of the proposed reforms
Although the proposed reforms to switching and lead generation are not yet law, they provide a clear indication of where regulatory scrutiny is likely to increase.
Lead generation
In anticipation of the proposed reforms, advisers should:
- be able to clearly explain how a client entered the advice process
- review whether any referral or lead generation arrangements are transparent in their commercial intent
- consider whether the client journey, from initial engagement through to advice, could be seen as influencing a decision to switch
Advice fees and switching
In anticipation of these reforms, advisers should:
- ensure that any switching recommendation can demonstrate a clear net benefit after fees
- consider how the method of fee deduction, particularly from superannuation at the point of switching, would be viewed by a regulator or trustee
- ensure the link between the advice provided and the fee charged is clearly articulated and documented
Conclusion
Recent high-profile fund failures have seen superannuation switching take centre stage as both a media issue and a regulatory priority. ASIC’s review activity and Treasury’s consultations make clear that scrutiny is increasing, not just on the quality of advice, but on how switching is initiated and paid for.
For advisers, their core obligations remain unchanged. Switching advice must be supported by a clear rationale, grounded in the client’s best interests and able to demonstrate a net benefit after fees.
As the level of scrutiny intensifies, advice processes must now stand up to closer examination across the full client journey, from acquisition through to implementation. Advisers who maintain strong documentation and clear client reasoning will be best placed to deliver compliant and defensible switching advice now and in the future.
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References:
[1] https://www.asic.gov.au/regulatory-resources/find-a-document/reports/rep-781-review-of-superannuation-trustee-practices-protecting-members-from-harmful-advice-charges/
[3]https://www.superguide.com.au/super-booster/largest-super-funds#:~:text=Superannuation%20is%20now%20very%20much,Billion.
[4] https://theconexusinstitute.org.au/wp-content/uploads/2026/02/State-of-Super-2026-Final-updated-20260213.pdf
[5] https://www.asic.gov.au/regulatory-resources/find-a-document/reports/rep-781-review-of-superannuation-trustee-practices-protecting-members-from-harmful-advice-charges/
[6] https://www.novigi.com.au/the-shield-and-first-guardian-failure-data-and-technology-lessons/
[7] https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2026-releases/26-029mr-asic-commences-new-review-of-advice-licensees-that-use-lead-generation-services/
[8] https://www.ifa.com.au/regulator-publishes-advice-lead-generation-list-and-launches-review/
[9] https://www.ifa.com.au/smc-doubles-down-on-super-switching-concerns/
[10] http://investmentmagazine.com.au/2026/03/super-switching-paranoia-drives-misinformation-campaign/
[11] https://www.investmentmagazine.com.au/2026/02/high-priority-mulino-ties-dbfo-to-consumer-protection
[12] https://www.ifa.com.au/ministers-dbfo-language-has-changed-as-wait-for-reforms-continues/
[13] https://storage.googleapis.com/files-au-treasury/treasury/p/prj3bbdc0dd212e233479128/page/c2026_756030.pdf
[14] https://storage.googleapis.com/files-au-treasury/treasury/p/prj3bc3bd170b62c39129f2e/page/c2026_756975.pdf
[15] https://www.asic.gov.au/regulatory-resources/superannuation-funds/superannuation-guidance-relief-and-legislative-instruments/super-switching-advice-complying-with-your-obligations-info-182/
CPD Quiz
The following CPD quiz is accredited by the FAAA at 0.5 hour.
Legislated CPD Area: Regulatory Compliance & Consumer Protection (0.5 hrs)
ASIC Knowledge Requirements: Superannuation (0.5 hrs)
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