ASIC issues serious and final warning on lead generation

Financial advice licensees risk losing their licence if they fail to adequately oversee lead generation arrangements, the financial regulator has warned.

This comes after ASIC uncovered significant supervision gaps across firms referring consumers into advice businesses.

The regulator's review of 15 Australian financial services (AFS) licensees found some lead generators had undertaken activities beyond marketing, including gathering client information, assessing risk profiles and discussing recommendations, tasks requiring appropriate authorisation and qualifications.

ASIC commissioner Alan Kirkland said the findings in Report 845, Lead generation advice models: Putting consumers and licensees at risk, sent a clear warning to licensees.

"ASIC's work in recent years has exposed how business models involving slick sales tactics to convince people to switch their super can expose Australians to serious financial harm," Kirkland said.

Between January 2025 and June 2026, lead generators referred 7639 new clients to financial advisers across the 15 licensees, representing 35% of all new clients. More than $678 million was switched or invested, around 90% of which came from superannuation savings.

Advice businesses also received $9.8 million in initial fees, alongside commitments to a further $4.5 million in ongoing fees.

ASIC identified inadequate controls, including limited access to call recordings, reliance on manual supervisions, insufficient monitoring of product recommendations and inadequate restrictions on adviser client volumes. Some lead generators also used potentially misleading claims, fear-based messaging and non-equivalent performance comparisons to encourage consumers to switch superannuation or investments.

"The poor approach to oversight taken by some licensees is unacceptable, particularly considering the scale and volume of business generated from these arrangements," Kirkland said.

He said licensees must ensure only authorised advisers provide personal advice and that recommendations are made in clients' best interests.

ASIC welcomed proposed government reforms to strengthen consumer protections but said it would continue taking enforcement action under existing laws where serious consumer harm is identified.

The review follows ASIC's ongoing scrutiny of high-risk superannuation switching models, including its publication and expansion of lists identifying entities linked to lead generation activity.

Kirkland warned commercial incentives must not come at consumers' expense, with licensees expected to identify and prohibit arrangements that compromise advice quality of exposed clients to harm.

The findings have prompted renewed calls for an outright ban on lead generation, with the Super Members Council (SMC) arguing licensing alone would not adequately protect consumers' retirement savings.

SMC chief executive Misha Schubert said the report demonstrated how lead generators had become embedded in sales processes involving high-pressure tactics and unqualified participants.

"This shows why an outright ban on lead generation is the only credible policy answer to protect Australians' life savings - parliament should outlaw these dangerous practices and sales funnels," she said.

Schubert also pointed to the Sheild and First Guardian collapses, in which around 12,000 Australian's were reportedly lured into losing about $1.2 billion through licensed lead generators. She said the government's proposed August 2026 consumer protection package, including restrictions on real-team superannuation contact and anti-hawking rules, should be strengthened to prohibit harmful lead generation models.