Key points
- The scale of the Shield and First Guardian failures threaten to undermine trust in our superannuation system more broadly.
- ASIC’s actions in relation to these matters should signal that we view superannuation trustees as a significant link in the chain of conduct that led to these outcomes.
- Trustees are in a unique position to identify harmful switching practices in real time, as they control the systems through which rollovers, advice fee deductions, and investment choices occur.
Acknowledgement of Country
I would like to begin by paying respect to the muwinina people as the Original Owners of the lands on which we meet today, as well as acknowledging the Tasmanian Aboriginal people who are the custodians of this land today.
I extend my respects to elders past and present and to any Aboriginal and Torres Strait Islander persons with us today.
Introduction
I’m grateful to the Law Council and Luke [Barrett] for the invitation to speak with you on a topic that is occupying a lot of my time and attention at the moment.
And in saying that, I want to be clear that I will devote most of my comments to the Shield and First Guardian matters, but I’d like to start by sharing the story of a gentleman who I'll call Robert, whose story really typifies what we have seen through those matters.[1]
Robert was getting close to retirement age and increasingly concerned about the performance of his superannuation.
He’d lost his job for a few years along the way and was worried that he may not have enough money for a comfortable retirement.
Having seen a post on social media, he signed up for a free superannuation check and was soon contacted by a woman who explained how his current fund was underperforming and offered to put him in touch with a financial adviser.
The financial adviser promised him he would be placed in a diversified fund with better returns, on a super product provided by what he thought was a trusted brand.
Some months later, when Robert went to check his superannuation savings, he found the fund was frozen. Later again, he checked his super balance, to find it had been reduced to zero.
This is a problem we have seen far too often at ASIC – people being induced to switch their superannuation into high-risk investments against their best interests.
It can take many pathways, but all too often has ended up in the same place – with people losing most or all of their superannuation savings.
And it’s a problem that everybody working within the superannuation system has the power to do something about.
The problem
So, with that introduction, let’s look specifically at the Shield and First Guardian matters.
Around 11,000 people – ordinary Australians living, working, and trying to set themselves up for retirement – invested over $1 billion into these funds.
These people have come from all walks of life – from highly paid professionals to blue collar workers. Many of them are well educated and financially literate. All of them trusted the professionals in the system to act in their best interests. And many of them lost their entire retirement savings.
There are a vast number of entities and individuals involved in the chain of conduct leading to that outcome.
First and foremost, the fund operators themselves who were responsible for the managed investment schemes.
The lead generators, including the data brokers and telemarketers, who supplied the pipeline of investors.
The financial advisers, and financial advice firms, that recommended the products.
The research houses who rated the products.
The auditors who signed off on the financial reports and compliance plan audits.
And finally, and of most interest to this audience, the superannuation trustees like Macquarie, Equity Trustees, Diversa, and Netwealth, who allowed these products onto their platforms.
The scale of the failures we’ve seen at every link in the chain threatens more than money though. It threatens to undermine trust in our superannuation system more broadly.
Now, that observation may not seem particularly fair, particularly if you are in a part of the system yet to be caught up in all of this.
But, from speaking to some of the people impacted, it is clear that they feel that it is the system that let them down. A system that they thought was safe, and that they could trust.
I would also observe that these issues have not happened in a vacuum. Over the past few years, we’ve seen significant member service failures, as well as a failure to prioritise retirement right across the superannuation sector. At the same time – and perhaps at least partly in response to those failures – we are witnessing record rates of self-managed super fund creation[2] and ‘switching churn’[3].
So, this is a system-wide problem. And one that every super trustee should have an interest in addressing.
ASIC’s role
Before making some more observations about the role of trustees, I want to be clear that ASIC has a really important role to play.
Addressing the conduct that led to this industrial-scale misconduct is one of our biggest priorities at the moment – so much so that we have made it a dedicated enforcement priority.
We have nearly 50 staff working on 26 investigations, including matters that are either before the courts or are ongoing investigations, involving numerous entities and individuals connected to Shield and First Guardian.
Our enforcement actions have to date included applying stop orders to prevent ongoing consumer harm, seeking the appointment of receivers and liquidators to secure investor funds, commencing court proceedings to preserve assets and restrict travel of persons of interest, executing search warrants with our partners in the Australian Federal Police, and cancelling licences and banning financial advisers.
We have commenced 12 cases against 21 defendants in connection with those investigations.
And critically for this audience, our actions have included cases against all four of the super trustees involved[4].
Two of those trustees, Macquarie and Netwealth, have admitted to failures in relation to Shield and First Guardian, respectively, and as a result of ASIC’s work, have returned more than $420 million combined to around 4,000 members.
Importantly, on Friday, the Federal Court made declarations that Macquarie had contravened the Corporations Act by failing to place the Shield Master Fund on a watch list for heightened monitoring.
His Honour Justice Wheelahan affirmed that the proposed declarations sought by ASIC were appropriate, because: “they serve to record the Court’s disapproval of the contravening conduct, they vindicate ASIC’s claim that Macquarie contravened the Corporations Act, they assist ASIC to carry out the duties conferred upon it by the ASIC Act and the Corporations Act in relation to other similar conduct, they inform the public of the harm arising from Macquarie’s contravening conduct, and they deter other corporations from contravening the Corporations Act.”[5]
His Honour’s comments reinforce the basis on which we commenced this action.
And of course, we are seeking compensation for members from the remaining two trustees: Equity Trustees and Diversa.
Although our actions against the four trustees arise from issues with two separate products, there are five common lessons from them that trustees should heed. I’ll step through those now.
The first is that ASIC’s focus is on substantive due diligence. It doesn’t matter if a trustee has an approval process on paper. What matters is whether or not the trustee obtained, assessed and acted on sufficient information to properly understand the product being offered to members and its associated risks. That means trustees should be able to explain not only what the process was, but why it was satisfied that the investment option was appropriate to make available to members.
The second is that ASIC’s focus extends beyond onboarding to ongoing monitoring. We expect trustees to maintain active oversight of investment options after they are onboarded to a platform. It can’t be set and forget. Trustees need monitoring frameworks that are dynamic and operational, including meaningful triggers for review, escalation, and intervention where appropriate.
The third is that member choice does not displace trustee responsibility. If a trustee makes an investment option available on its platform, ASIC expects that the trustee has undertaken its own due diligence and continues to monitor the option appropriately over time. Product risk doesn’t become somebody else’s problem because advice was given, or because the member selected it. In other words, the trustee remains accountable for its decisions in making financial products available to members.
The fourth is that systems and controls matter – and our focus extends to whether or not trustees are actually capable of giving effect to the governance settings they have adopted. This is particularly relevant in the Diversa proceeding, where ASIC alleges failures not only in diligence and monitoring, but also failures to have systems and processes in place to ensure compliance with a 50% holding limit.
More broadly, the matters suggest ASIC expects trustees to have practical mechanisms for watch‑listing, risk exposure management, escalation and, where necessary, proactive intervention.
And finally, the fifth lesson is that trustees need to be able to evidence their basis for satisfaction. In other words, it’s not enough to tell us your systems and controls are working - we need to see them working. Trustees should be able to show:
- what information was obtained,
- what enquiries were made,
- what risks were identified,
- what conditions or limits were imposed,
- what monitoring occurred over time, and
- why the trustee remained satisfied that the option should continue to be made available to members.
This matters particularly where members retirement savings are being directed into complex, illiquid or untested products, as we have seen.
Taken together, what our actions should signal is that we view superannuation trustees as a significant link in this chain.
Trustees are in a unique position to identify harmful switching practices in real time, in a way that few others can - because trustees control the very systems through which rollovers, advice fee deductions, and investment choices occur.
That makes trustees a particularly important gatekeeper when it comes to addressing the kind of misconduct that we have seen.
The role of trustees
For the trustees that you work for or advise, that means taking a number of steps. I’ll work through a few of those now.
The first is reviewing their processes to ensure members are not being exploited by superannuation switching business models.
Trustees should have processes in place that allow them to identify practices that may result in the erosion of super balances, including from inappropriate advice fee charges.
Our surveillance reports over the past few years have repeatedly highlighted the need for greater trustee oversight, including in relation to superannuation-switching business models.[6]
In particular, Report 779 – our review of superannuation trustee practices to protect members from harmful advice charges – made it clear that involvement of advisers, platforms, or research houses does not displace trustee responsibility. In other words, the legal obligation of superannuation trustees to act in the best financial interests of members cannot be outsourced. Our Report 781 also cautioned against an over-reliance on member consent forms in lieu of robust oversight practices – as I said before, product risk doesn’t become somebody else’s problem simply because the member selected it.
We’re currently undertaking a review of superannuation trustee practices to better understand the steps they have taken to disrupt the high-risk super switching model, building on those previous surveillance programs.
We’re also supportive of the government’s proposal to introduce a legislative obligation on superannuation trustees to report to ASIC suspicious or anomalous patterns of behaviour, which the trustee reasonably considers could place their membership at risk of significant detriment.
In noting our support for that proposal, it is worth observing that some trustees are doing that now – and the alerts that they send us are a valuable source of intelligence. We would simply like to see that adopted as a broader practice across the system.
The next step for trustees is to review our list of known entities involved in lead generation.
We recently commenced a review to identify financial advice businesses that use lead generation services, to understand the nature of these arrangements and where appropriate, take disruptive or enforcement action.
As part of this, we’ve published the names of entities and individuals identified in that review, and a list of features of lead generation activities that can involve risk to consumers’ retirement savings.
While we are not saying that the entities named there, or the individuals associated with them, have done anything wrong, superannuation trustees should review this list of features and compare it with their own internal data for indications of high-risk superannuation switching conduct.
Lead generators that mislead consumers, use high pressure tactics, or provide financial services without a licence risk contravening the law – and licensed individuals or entities that engage their services share this risk. With this review, we’re putting them on notice that we’ll consider taking enforcement action where we detect evidence of contraventions of the law.
The final step is for trustees to consider how they approve and monitor investments.
Our Report 779 on the performance of superannuation choice products found that too often, trustees dropped the ball on performance and outcomes once an option had been approved.
It’s important to remember that trustees remain gatekeepers of investment options made available to members, even in choice products.
Approval or inclusion on a menu should not be a one‑off decision – there must be ongoing monitoring, with action taken when options underperform or pose increasing risk.
And as I said before relying on external research ratings or adviser recommendations is not a valid excuse for failing to discharge trustee obligations.
Conclusion
If I can leave you with one final observation, I’d like to reflect for a moment on the legislated objective of super. It took 30 years to finally agree on one – and I think the first time I met Luke was at one of the attempts to do that, about 10 years ago at a meeting in Canberra – so I think it is worth reflecting on where that landed for just a moment.
That objective is, of course: “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”. Dignified being the operative word here.
Many of the people impacted by this high-risk super switching misconduct have shared with us that it is not merely the monetary loss which has had the most impact on them. It is the loss of dignity around their retirement.
Protecting super is the job of everyone in the system. For trustees, that is reinforced by important obligations that underpin our enforcement activity. And as lawyers working in and around the system, your role is to help them to understand their obligations, and to follow them consistently.
Thanks.
[1] Note: For privacy purposes, this story is a compilation of experiences of different people who have been impacted by high-risk superannuation switching misconduct.
[2] Australian Taxation Office data shows that 14,494 SMSFs were created in the September 2025 quarter alone. Source: Self Managed Superannuation Funds - Dataset - Data.gov.au
[3] Switching churn refers to super switching activity where member exits from a fund are offset by new members joining. Source: Conexus State of Super 2026 report
[4] In August, we commenced civil penalty proceedings against Equity Trustees, alleging due diligence failures relating to Shield – subsequently amending those proceedings to seek compensation for investors. In September, we commenced civil proceedings against Macquarie Investment Management for contraventions relating to Shield, and in December, we commenced civil penalty proceedings against Diversa and Netwealth in relation to First Guardian.
[5] Australian Securities and Investments Commission v Macquarie Investment Management Limited [2026] FCA 303, [10]
[6] Reports 779, 781, 824 as well as our cold-calling review.
