Concerns raised over super switching consultation

Financial services consultant Ben Walsh has called out concerns with Treasury's super switching consultation, saying parts of it miss the mark.

Walsh said the consultation focuses on "the 'switch' as the point of failure" while ignoring a "massive 'user journey' debt created by failing service levels, legacy data matching at the ATO, and a government-mandated performance test that is effectively ordering 12,400 victims and millions more to migrate".

Walsh said APRA's performance test actually forces many Australians to switch funds.

"The most glaring contradiction in the Treasury's proposal is the collision with APRA's Performance Test. Since 2021, APRA has been running a 'hard-coded' annual performance check. If a fund fails to meet a specific benchmark, the government mandates that the fund send a 'we suck' letter to every member," Walsh said.

"That letter is effectively a 'system failure' notification. It tells the member: 'Your fund is underperforming. You should consider moving your money.'

"The government is literally ordering millions of people to switch."

Walsh added Treasury has assumed super switching is a choice made under duress.

"It ignores the reality that for millions of Australians, a switch is a system cleanup," he said.

"We are currently hurtling toward July 1, 2026, the date Payday Super goes live. This moves the system from 'batch processing' to 'real-time streaming'. Employees will see their super hit their accounts alongside their salary. This is the ultimate engagement trigger."

Walsh said back-end systems have not caught up, and while stapling reforms and Single Touch Payroll have reduced duplicate accounts, the ATO's database is still a landscape of "dirty data".

"The April 2026 reforms are a pivot away from 'advice simplification' and toward 'system isolation'," he said.

"The government isn't misreading the data; they are just choosing the easiest story. 'Protecting grandma from greedy advisers' is a better news cycle than 'fixing the ATO's legacy database' or 'addressing the 30% surge in service complaints'."

Meanwhile, minister for financial services Daniel Mulino said the aim of restricting super switching is to "give consumers a bit more time to have a second thought".

Mulino said Treasury is focused on putting more regulatory scrutiny around lead generators to ensure Australians aren't being pressured to make a decision that isn't in their best interests.

"There's a real argument that we're going to look into in detail as to whether or not they should be covered by AFSL licences [sic] or the financial sector law in particular. And there's a good argument that given the quantum of the decisions that people are making, they're talking often about switching their entire life savings, that kind of regulatory arrangement is more appropriate," Mulino said.

"There's also potentially restrictions you might put on lead generators in relation to conflicted remuneration or other aspects of the way they operate."