It is also critical that funds have “the most robust governance settings possible”, Mr Frydenberg said.

“I am attracted to the notion of having an independent chair and a larger number of independent directors.”

Speaking to SMSF Adviser, executive director of the SMSF Owners’ Alliance, Duncan Fairweather, backed the assistant treasurer’s move to focus on the governance of the major APRA-regulated funds.

“A Treasury review has been underway for over a year and it’s time for action,” he said. “SMSF owners have an interest in this issue because many of them invest in APRA-regulated funds.”

Mr Fairweather stressed a majority of the trustee company boards of public offer funds should be independent.

“Independent trustees are better placed to make objective decisions in the interests of all fund members; conflicts of interest are likely to arise less often and be better managed,” he said.