The Australian Securities and Investments Commission (ASIC) is intensifying its scrutiny of lead generation practices within the superannuation sector, naming 44 groups as part of a review triggered by the collapse of several managed investment schemes. The regulator’s action, announced on , follows investigations into the failures of Shield Master Trust, First Guardian and Australian Fiduciaries, which collectively put over $1 billion of Australians’ retirement savings at risk.
The review centers on firms that actively solicit individuals to switch their superannuation funds, often directing them towards less regulated investment options. ASIC’s concern stems from evidence suggesting misleading information and high-pressure tactics are being used to convince consumers to transfer their savings, potentially exposing them to significant financial losses. The regulator is publishing a list of entities involved in lead generation, those acting as referral partners, and advice licensees who have acquired leads since .
The practice has come under fire after thousands of investors in First Guardian and Shield discovered the potential loss of their retirement funds. To date, approximately 4,000 consumers have received around $421 million in payments from Macquarie and Netwealth as part of court-enforceable undertakings agreed to with ASIC, but the recovery process remains incomplete. Less than 2,000 of the roughly 11,000 investors affected – representing approximately $1.1 billion in invested funds – have lodged complaints with the Australian Financial Complaints Authority (AFCA), prompting ASIC to proactively reach out to investors with information and resources.
ASIC is directing investors to a new consumer website, takeyoursuperback.com, developed by Super Consumers Australia with ASIC funding. The site provides guidance on lodging complaints with AFCA, accessing support services, and understanding their options for seeking compensation. The regulator emphasizes that the listing of entities in the review does not imply wrongdoing, but urges consumers to exercise caution when dealing with businesses utilizing lead generation services.
The concerns highlighted by ASIC echo the experience of Liz, who shared her story with the Australian Broadcasting Corporation. She recounted receiving unsolicited calls from a salesman encouraging her to move her superannuation out of an APRA-regulated fund and into a less regulated managed investment scheme. “They were really pushy,” Liz said, describing the persistent follow-up calls and pressure to make an immediate decision. Her experience prompted her to research the firm, Clear Sky Financial, which is licensed under InterPrac – the same licensee currently under investigation by ASIC in connection with the Shield and First Guardian collapses.
Clear Sky Financial, which reportedly has $540 million in assets under management, previously utilized lead generation firms to build its client base. However, InterPrac stated it issued a notice in prohibiting its financial advisors from using lead generation firms for marketing purposes. InterPrac told ABC News it expects all authorised representatives to act ethically and in line with the Corporations Act.
The core of ASIC’s concern lies in the “marketing fees” paid by licensed financial advisors to lead generators for providing potential clients. This practice was prevalent in the cases of First Guardian and Shield, where consumers were persuaded to transfer funds from regulated superannuation funds into higher-risk schemes. The collapse of these schemes has left investors facing limited prospects of recovery, with liquidators reporting only a small fraction of the funds have been recovered.
ASIC Commissioner Alan Kirkland emphasized the significant harm caused by lead generation in the context of superannuation switching. “We’ve seen thousands of cases where consumers have been lured in through a social media ad and a series of phone calls, they’ve often been misled about how their current super fund performs and they’ve been convinced to switch their super from a relatively good fund into a high-risk investment, and many of them have lost their entire retirement savings,” he stated.
The regulator is now urging consumers to be vigilant for “red flags,” including pressure to act quickly, claims of underperforming existing funds, and unsolicited contact. ASIC also warns against engaging with unlicensed advisors, limited direct contact with a licensed financial advisor, and promises of unrealistic returns. The agency is prepared to utilize its full range of enforcement tools if evidence of legal violations is uncovered, and has already commenced legal action against Imperial Capital Group, a lead generation firm.
Super Consumers Australia is advocating for a complete ban on lead generation for superannuation and financial advice, as well as the elimination of loopholes allowing unsolicited “cold calls” offering financial services. Chief Executive Xavier O’Halloran argues that the current consumer protections are inadequate given the significant value individuals place on their retirement savings. “Super is often people’s second biggest source of wealth outside of the family home, and the consumer protections need to match that,” he said.