SMSFs are being used as the vehicle of choice to move retirement savings out of the superannuation system, creating a wider reputational risk for the sector, two senior Australian Financial Complaints Authority (AFCA) executives have claimed.
AFCA investments and advice lead ombudsman Shail Singh said a key theme seen in regards to complaints related to SMSFs, including those connected to the Shield Master Trust, First Guardian Master Trust, Dixon Advisory and UGC, was conflicted advice and the misuse of SMSFs.
“You can’t help but look at the cost-of-living issues and there are people with small balances trying to take risks to improve their balances and do it quickly,” Singh said during a presentation at the SMSF Association National Conference 2026 in Adelaide today.
“The reality is that it’s also a way to access money easily and not only for those that have been involved in Shield and First Guardian, but for individuals compared to an APRA [Australian Prudential Regulation Authority]-regulated fund.
“We’re not saying, and I need to be really clear about this, that SMSFs are bad. There is a place for them.
“They are extremely useful when done properly and people have the requisite degree of interest in what they’re doing, but they happen to be the vehicle by which people can access that pot of superannuation money.
“That’s essentially what we’re seeing when money is being taken from APRA-regulated funds put into an SMSF and gets syphoned out into a Shield or First Guardian, or put into renovations on a house or into buying a Ferrari.
“I’m not exaggerating that has actually happened and it’s disgusting that a person’s life savings can be taken that quickly.
“So the government is looking at reforms to these things. We welcome that and we’re helping in terms of that process.”
AFCA investments and advice senior ombudsman Alexandra Sidoti said the misuse was creating reputational risk for the sector despite SMSFs being used appropriately by many thousands of people.
“The use of SMSFs by these more nefarious players is presenting a real reputational risk and it’s a challenge for all of us to think about how this can be mitigated going forward,” Sidoti said.
“Wrap platforms are starting to take action to remove investments from their platforms and we have seen them in the spotlight and the concern is now they are tightening things up, SMSFs are going to again be the vehicle of choice for financial firms who are doing the wrong thing.”
