Key points
- More and more people are risking their retirement savings because they’ve been led to believe their current fund is underperforming and persuaded to seek higher returns elsewhere.
- While bad financial advice is obviously a key part of this problem, there are a whole range of other entities that are involved in this process that we are looking at.
- ASIC is working to make the system safer for consumers, but we can’t address these issues alone. Similar to the fight against scams, this issue requires a collective response.
Acknowledgement of Country
I would like to begin by acknowledging the Traditional Owners, the Gadigal people of the Eora nation, and their ongoing connection to and custodianship of the lands on which we meet today, and to pay my respects to elders past and present. I extend that respect to Aboriginal and Torres Strait Islander people present.
Introduction
I’d like to start with a story about a woman who thought she was taking control of her financial future, only to see it slip away.
She was approaching 60 and concerned that she may not have enough superannuation to retire. She started looking online for ways to boost her super balance and began seeing a lot of targeted social media advertisements that made her feel even further behind. These advertisements offered a free superannuation review, and one day, she signed up. She had used comparison sites before to get a better deal on her insurance. How different could this be? Soon afterwards, she received a call back advising that her current fund was underperforming. They passed her onto a financial adviser, who said she would get better returns if she switched her super into another fund. A substantial portion of her money ended up in a managed investment scheme called the Shield Master Fund. I’m sure you know now where her story is headed[1]…
The reality is that we are seeing stories like this over and over in our investigations into suspected misconduct in financial services. Stories of shameless sales tactics designed to convince honest and hard-working Australians to transfer their superannuation savings into complex and risky schemes through an SMSF, or more commonly, a platform product. Stories that end with that nest egg diminished or completely dissipated. Stories that say something needs to change.
Of course, I know most of the financial services industry does the right thing. And obviously there can be significant benefits for consumers to switch their super or to consolidate it. But we’re seeing more and more people risking their retirement savings because they’ve been led to believe their current fund is underperforming, and they’re being persuaded to move those funds somewhere else in the hope of achieving a better return.
The most recent numbers from the Australian Financial Complaints Authority (AFCA) say it all. Last financial year, investment and advice complaints rose by 18 per cent. Complaints involving self-managed super funds rose 95 per cent. And complaints alleging failure to act in the clients’ best interest rose 124 per cent[2].
And, while bad financial advice is obviously a key part of this problem, there are a whole range of other entities that are involved in this process that we're looking at – for example, the lead generators, the research houses, the superannuation trustees, and the managed investment schemes. Because of the number of entities involved, it can be difficult even for experienced investors to spot the problems here and what’s really going on.
It reminds me a bit of the story of the blind men who encounter an elephant for the first time. Each man feels a different part of the elephant’s body – a trunk or a tusk – and thinks they’re dealing with a different animal or object. For a long time, each of us has only touched only one part of this problem. Everyone has 20/20 vision in hindsight, but it has taken ASIC’s various surveillances and investigations combined with intelligence from industry – the people in this room – to fully reveal the industrial scale of this suspected misconduct.
So today I am here to talk about this issue that is confronting us all.
What’s the problem?
A problem defined, as they say, is half-solved. So what exactly is the problem?
The problem obviously isn’t financial advice itself, or super platforms, or marketing.
The problem is more insidious. There is a significant pot of money in our super system that bad actors are trying to exploit, on an industrial scale. We’ve all seen the numbers on Shield and First Guardian playing out. More than $1 billion invested by over 11,000 people. Our priority has been to preserve assets so that they can be realised for investors, but even with this action it is unlikely every investor will be made whole.
And when we look at these examples, we see that the various players across different sectors each represent just one aspect of the problem – a problem in my view that needs a holistic response from industry, regulators, and from Government (a point to which I’ll return later).
Because the fact is, while most of the industry is doing the right thing, there are serious and significant issues that we can’t ignore. And bad actors wreak havoc on more than Australians’ life savings when they exploit the cracks in the system. They also risk damaging trust in the system as a whole, and precipitating further interventions from policymakers and regulators.
What ASIC is doing
So, what is ASIC doing about it? The short answer, I think, is – a lot.
First, we’re alerting people to what’s happening and empowering them to take action. We recently launched our second consumer awareness campaign about attempts to lure Australians into switching their superannuation into high-risk investments. We’ve warned people to be on red alert for high-pressure sales tactics, clickbait advertising, and promises of better returns. Our message to Australians has been if you are unsure or are feeling pressured, just hang up. Any good investment opportunity is not going to disappear overnight.
As our Deputy Chair Sarah Court has said repeatedly, or Commissioner Kirkland who is here with me today: you wouldn’t make a decision to buy or sell a house in the space of a phone call – the same level of wariness needs to be applied to the way people manage their retirement savings.
We’re also doing a range of work over the next year to further uplift standards across the industry, including:
- Reviewing platform trustee practices to better understand the steps they’ve taken to disrupt the high-risk super-switching model[3], and
- Scrutinising advice licensees that are using lead generation services to see how industry practices have changed in response to our earlier work in this area[4].
Second, we’re taking enforcement action to preserve assets where we can, prevent further harm, and to hold people to account.
Importantly, two of ASIC’s 2025 enforcement priorities are misconduct exploiting superannuation savings and unscrupulous property investment schemes.
We have doubled the number of new financial advice-related investigations commenced since last year, and almost doubled the number of new investment management investigations.
The investigations we have been undertaking in this area are among the most complex and resource-intensive investigations we’ve conducted. It is one of ASIC’s priorities to investigate what has happened and to preserve as much of investors’ funds as possible while our investigations are continuing.
For example, in relation to Shield and First Guardian, we have more than 40 investigators working across these matters and have been in court more than 40 times carrying out a range of enforcement actions, including:
- stop orders to prevent ongoing consumer harm
- appointing receivers and liquidators to secure investor funds
- commencing court proceedings to preserve assets and restrict travel of persons of interest – and there’s quite a few of them
- executing search warrants with our partners in the AFP, and
- cancelling licences and banning certain financial advisers – and there’s a lot of work involved to take those steps.
We’re investigating the conduct of the lead generators, the financial advisers, the superannuation trustees, the managed investment schemes, and the research houses. Obviously, I can’t speak about these investigations in detail because they’re ongoing – but rest assured that this work is a very important focus for us.
We’ve also been looking at the options available to us to support the people directly affected by this suspected misconduct. On that point, if you are a trustee of a super fund, or a responsible entity – your responsibility is through to that end investor, to that end member. Just look at the number of consumers caught up in Shield and First Guardian who believed they were dealing with a well-known financial institution or given comfort by their involvement.
How you can help
Which brings me to our third area – engagement with industry and other regulators.
ASIC is working to make the system safer for consumers, but we can’t address these issues by ourselves. None of us can. The only strategy that has even a glimmer of hope of succeeding is one that involves all of us working together.
This isn’t wishful thinking. The progress we’re seeing in disrupting scam activity is a good example of what can be achieved when we all pitch in and work together. Scam losses are trending downwards as a result of a concerted effort by government, law enforcement, and industry[5]. Telcos, banks, regulators, and policymakers all working side by side, to protect Australians. This kind of whole-of-ecosystem response is the only way a problem that I’ve been talking about can be properly addressed.
Part of the reason this problem needs a collective response is that our data collection powers for managed funds are limited, which means our oversight is too. This is a point I’ll return to later, but what that means is those of you working in the industry can see things that ASIC can’t – or at least you can see them before ASIC can. Which means there are things you can do right now to make a difference.
Both Shield and First Guardian, for example, were made available through a platform. In our view, if you’re a superannuation trustee, you must undertake sufficient due diligence of new investment options before you make them available to investors. Think of it like you’re a supermarket. Sure, you’re not responsible for overseeing the production of everything you sell, or the day-to-day management of the companies that make them – but you are expected to check that the product is fit for purpose, because you have chosen to put them on your shelves. The same goes for advice licensees. There’s a reason why we are focusing on the role of licensees in our enforcement work – you are the first line of defence. You must have strong quality controls for your approved product lists.
We also expect super trustees to review their processes to ensure new members aren’t being exploited by super-switching business models. You should have processes in place that allow you to identify practices that may result in the erosion of super balances, including from inappropriate advice fee charges. You can’t pass the buck by saying ‘Well, there's an adviser in the picture, so therefore trustees we have a diminished role.’
Similarly, if you are a licensee who has engaged the service of a sales referral source, you should have in place adequate monitoring and supervision arrangements to detect concerning conduct and to make sure your advisers are acting in the best interests of their clients.
Why ASIC can’t do it alone
I said earlier that ASIC is trying to make the system safer for consumers, but we can’t do it alone. We are trying to do more to deter others, but based on ASIC’s previous public submissions on these issues, as well as our observations of the suspected misconduct we are currently investigating, we believe it requires consideration of law reform in key areas.
The first theme is conflicts of interest. Since the introduction of superannuation Choice products, we’ve seen a rise in bad actors encouraging consumers to rollover their superannuation against their own best interests. As Charlie Munger once said, ‘show me the incentives and I'll show you the outcome’. We need to have a hard look at who really benefits from this high-risk super switching conduct.
We need to be asking what payments are being made to lead generators, financial advisers, and their respective licensees along the way. What links are there between the property developers, responsible entities, and financial advisers? And are our existing conflicted remuneration and conflicts of interest rules robust enough to manage this tangled web? In short, we’ve got to follow the money.
Second – we have to raise standards for gatekeepers. Let’s not forget that it is compulsory for Australians to save for their retirement through the superannuation system. The vast majority of people doing so are not financial experts. They rely heavily on the professionals in this system to manage their money well. Yet for those people caught up in the Shield and First Guardian matters, this system did not serve them well at all.
It appears to us that we need higher standards for the key gatekeepers in the system – the research houses, financial advisers, super trustees, and responsible entities of managed investment schemes. We need to ask ourselves whether some of the entities involved in this suspected misconduct are adequately captured by existing laws.
Some key questions in ASIC’s focus include: Are financial and professional indemnity requirements adequate? Do we need to place limits on what superannuation can be invested in? Should we demand more of superannuation trustees and responsible entities? Do we need to place restrictions on retail investments in high-risk funds? Is the current retail client definition still ‘fit for purpose’? Or do we have to slow down the process of rolling over superannuation and creating an SMSF?
The third area for reform is to fix long-running issues in the managed investment scheme sector.
ASIC and others have been calling for a range of reforms here for almost three decades. These issues have been ventilated in many reviews and inquiries, and I won’t labour them here, but we are continuing to advocate for them. I will mention just one today – data and transparency.
To be frank, our data collection powers lag global best practice. Other regulators – including the SEC, the EU’s ESMA, the UK’s FCA, and New Zealand’s FMA – are all empowered to collect data on managed funds for use by the regulator, industry and consumers. Australia is an outlier here.
We have a long history of advocacy in this area – and I note the FSC does too[6]. We’ve recommended introducing a legislative framework for the recurrent collection of data on managed investment schemes, including unregistered schemes[7].
Our work on public and private markets has also identified the scarcity of recurrent data on managed investment schemes as a risk. Let’s not forget, First Guardian was essentially a private equity product.
The other point I’ll make is that Australia’s managed investment scheme regime is very permissive. The bar is so low to register one, it basically serves no barrier to entry at all. It doesn’t matter if the underlying asset is alpacas or meme coins - if the fund has a valid trust deed and disclosure document, ASIC has to register it. And then, so much of our work becomes about picking up the pieces afterwards when things go wrong, rather than preventing the harm – and who pays for that? All the people in this room.
I want to make it clear here that more regulation isn’t our first response, or the only answer. I’ve spoken many times in the last year about avoiding regulatory complexity. However, regulatory reform must be considered in the face of such grievous consumer harm - particularly when those who are doing the right thing carry the cost for those who aren’t.
Remember, the idea isn’t to punish good practice. The idea is to protect it – to maintain and strengthen trust in the good actors, eliminate the bad, and ensure the system as a whole is resilient for everybody.
Conclusion
At the end of the day, as I’ve said, I know most of you are doing the right thing. But just because you aren’t the bad actor, that doesn’t mean the behaviour of the bad actors won’t impact you. This is a system-level problem, and it requires a whole of system response. Everyone has a role to play. And the only way forward is together.
And this is really the key point I want to leave you with. Bad actors in this sector could undermine trust in Australia’s superannuation system. That’s bad for everyone - investors, consumers, and industry alike.
ASIC is working to make the system safer for consumers – but we can’t do it alone. It’s critical that we work together, if we want to rebuild trust and create a genuine transformation in perceptions of the industry. That’s what it’s going to take.
Finally, there’s no silver bullet here. I wish there was. But at least there’s a clear way forward. We have a shared goal – good financial outcomes for all Australians. And we can only reach that goal together.
[1] This story combines the experiences of multiple people to protect individual identities.
[2] AFCA receives more than 100,000 financial complaints in 2024-25 | Australian Financial Complaints Authority (AFCA)
[3] This builds on our previous work in this area. See REP 781 and REP 779
[4] This follows on from our review of the use of high-pressure sales tactics leading to super switching
[5] NASC Targeting Scams Report - March 2025
[6] Financial Services Council - Submission in response to: Review of the regulatory framework for managed investment schemes - consultation
[7] Review of the regulatory framework for MISs: Submission by ASIC
