Equity Trustees has used its submission to Treasury to argue there is no case for banning or winding back Australia’s independent trustee model, pushing back on a debate that has intensified after the collapse of investment products linked to Shield and First Guardian.
The company’s position goes to the centre of a live regulatory question: whether failures in parts of the managed investment scheme market point to a flaw in the external trustee structure itself, or to weaker conduct elsewhere in the chain. For a market that relies heavily on trustees, responsible entities and custodial oversight, the answer matters well beyond one operator.
Why the Model Is Under Pressure
Independent trustees have come under heavier scrutiny as policymakers examine how investor protections worked in practice when high-profile products ran into trouble. The concern is straightforward: whether a trustee that is separate from product manufacturing and distribution is sufficiently equipped, incentivised and empowered to detect problems early and step in before losses deepen.
Equity Trustees is arguing that the recent collapses do not justify a structural verdict against the model. Its submission to Treasury maintains that removing independent trustees would not automatically improve member outcomes and risks confusing the failure of particular schemes with the design of the framework itself.
What Equity Trustees Is Arguing
The company’s core message is that the independent trustee model remains a valid part of Australia’s investment governance architecture, provided the rules around duties, escalation and accountability are clear and enforceable.
- Separation matters: an independent trustee can provide oversight without the conflicts that may arise when product control and supervision sit too closely together.
- Failures are not uniform: collapses in individual funds do not, on their own, prove that the trustee model is broken across the market.
- Targeted reform beats a ban: stronger member protections, sharper compliance expectations and better visibility over scheme operations are more practical than abolishing an established structure.
That is an important distinction for Australia’s funds sector. A blunt change to trustee arrangements would have consequences for responsible entities, administrators, platforms and advisers, particularly in markets where specialist providers play a central role in scheme governance.
Treasury’s Review Has Broader Implications
Treasury’s work on member protections is not just a post-mortem on recent fund failures. It is also a test of how far Canberra is willing to recast oversight settings in managed investments, a sector that sits between retail investor protection, financial product distribution and corporate governance.
For the broader market, the policy direction could shape compliance costs, legal risk and the operating model for trust-based investment structures. That has direct relevance for listed and unlisted managers, super-adjacent investment vehicles and service firms that sit inside the funds plumbing.
If policymakers conclude the problem is primarily one of supervision and enforcement, the likely outcome is tighter obligations and more active intervention powers. If they decide the structure itself is at fault, the industry could face a more disruptive redesign.
- For investors: the focus remains on whether protections are effective before a scheme fails, not merely after.
- For operators: submissions like this are an attempt to steer the debate toward governance standards rather than wholesale structural change.
- For regulators: the challenge is calibrating reform without impairing legitimate parts of the investment market.
The Australian Angle
This debate is particularly important in Australia because trustee and responsible entity arrangements are embedded in the way many local investment products are launched and supervised. Any move to constrain the independent model would ripple through a wide span of the domestic funds industry.
That makes Equity Trustees’ intervention more than a defensive submission from one company. It is also an early marker in what could become a broader contest over where responsibility sits when schemes fail: with trustees, product issuers, promoters, distributors, or all of the above.
The cleanest read for now is that industry participants are trying to prevent Treasury from turning a high-profile failure cycle into a structural rewrite. Whether that holds will depend on how convincingly the sector can show that stronger member protections can be delivered without dismantling the independent trustee model that underpins so much of Australia’s investment infrastructure.