“Our philosophical position is it’s a light-touch regulatory regime, and therefore people have responsibility for their financial decision-making and it’s not up to government to compensate them and potentially create a moral hazard which encourages excessive risk taking,” Mr Sinodinos said.

Responding to these comments, the SMSF Professionals’ Association of Australia (SPAA) said it equally remains “steadfastly opposed” to any form of compensation scheme for SMSFs.

“The guiding philosophy underpinning self-managed super is that trustees/members take responsibility for their own retirement income outcomes,” said chief executive Andrea Slattery.

“By opting to go down the SMSF path, trustees/members have to appreciate that decisions rest with them,” she added.

Superannuation Australia’s Reece Agland also opposes a compensation scheme for SMSFs, saying trustees have to take responsibility for their own decisions.

“If you provide a safety net for all SMSFs, then you are encouraging risk taking because risky decisions will be compensated for,” said Mr Agland.

“It is no one’s responsibility but your own to set up your investment strategy. Get it right and you reap the benefits; get it wrong and you suffer as a consequence. It is harsh, but that is the way it goes when you take the responsibility to manage your own retirement,” he added.

“The best thing for SMSFs is to keep it in a light-touch regulatory environment with self-responsibility for the decisions made. The [Senator] understands this and wants to keep it that way.”