The government announced last month that it would allocate $2.7 million towards reviews of the Reserve Bank and the regulatory framework for managed investment schemes (MIS).

Minister for Financial Services Stephen Jones has said the MIS review would be a “health check” on the sector and the current regulatory settings.

“We want to have a look at that and to see if existing regulatory settings and oversight settings are right,” Mr Jones said, adding that this review will seek to remedy issues in product providers rather than banking and advice.

Ms Scotchbrook noted that there have been a number of high profile cases over the years impacting SMSFs.

“Anyone in Western Australia will be very familiar with the collapse of the Sterling Income Trust which was a rent for life scheme. They also had some similar schemes operating on a smaller scheme in other parts of the country,” she said.

“People were selling their family home and using their superannuation savings to buy into a rent for life scheme so when this collapsed, they effectively lost their life savings and the roof over their head at the same time. Rather than a rent for life scheme, they had actually invested in a managed investment scheme that was complex and inappropriate for that particular cohort.”

Ms Scotchbrook noted that the Senate Economics References Committee handed down its report for its inquiry into the collapse earlier this year.

“That looked at some of the failings around this particular collapse such as the regulatory environment and the compensation scheme of last resort,” she said.

“There were some really important findings that came out of that particular Senate Inquiry so that might help shape and inform what this review will look like.”

She noted that it was an ALP Senator that commence the Senate Inquiry into the Sterling Income Trust collapse.

“So it could be a detailed review of that regulatory environment for managed investments schemes and we anticipate that it will also include looking at the compensation scheme of last resort, but we're eagerly looking forward to seeing some more detail on that,” she stated.

The SMSF Association, along with other industry associations, has previously flagged concerns about the government’s decision to exclude MISs from the Compensation Scheme of Last Resort.

SMSF Association chief executive John Maroney noted that these schemes have had enormous financial impact on those consumers caught up in them, including SMSFs.

Mr Maroney referred to the collapse of Trio Capital in 2009 which saw Parliamentary Joint Committee Inquiry held to examine it as well as other related matters.

“With all the issues the common thread was a lack of consumer protections that were highlighted by our association and other organisations,” he said.

The collapse of Trio Capital, which was a responsible entity for 28 managed investment schemes, saw SMSF members lost considerable amounts of money due to the fraudulent activities of the scheme operator, said Mr Maroney.

“Exposure to fraud resulted in significant losses for direct investors and superannuation funds. The superannuation funds involved included both large APRA funds and SMSFs. In total, 415 direct investors and 285 SMSFs had no access to compensation.”

The FPA has similarly criticised the exclusion of managed investment schemes from the CSLR.

“While it was in Opposition, Labor suggested amendments which would at least include MISs in the CSLR, and it is disappointing that these changes have not been included in the bill,” said FPA chief executive Sarah Abood.

Ms Abood pointed out that in the case of the Dixon Group, where consumer harms are the result of product failure, those investors would not receive compensation under the current design of the scheme.

Ms Scotchbrook said the SMSF Association will look to participate in any stakeholder engagement with the MIS review and seeking feedback from members.