ASIC targets advisers, platforms, research houses in super switching scams

ASIC warns it will take a deeper dive into the roles that financial advisers, superannuation platforms and research houses are playing in members being pushed into high-risk investment schemes.

The corporate regulator is closely looking at the entire ecosystem of the high-pressure tactics used for superannuation switching, which has culminated in hundreds of millions of dollars in lost or inaccessible retirement savings.

ASIC deputy chair Sarah Court pointed out at a media briefing yesterday that across the value chain - from the lead generator to the financial adviser and super fund to platforms such as Macquarie and Equity Trustees - there is evidence of misconduct and the pocketing of commissions and incentive payments.

"So, we are investigating every step in the web, including the lead generators at the one end, and the financial advisers that are receiving the commissions, understanding and working out the links between the advisers and the lead generators is something that we are looking at," she said.

The downfall of Australian Fiduciaries, ISG, and United Global Capital (UGC), as well as the Shield Master Fund and First Guardian Master Fund in recent years has come to a head for ASIC, which has recently ramped up its policing of high-pressure sales tactics that are highly persuasive in urging members to switch super fund investments.

"Our primary aim here in the enforcement work that we're taking is to preserve any assets that remain in the schemes so that they can be realised to the extent that they are available for the benefit of the consumer while we continue our investigative work," Court said.

It is estimated that more than $480 million may have been invested in the Shield Master Fund from about 6000 investors.

About 600 retail investors invested $160 million into Australian Fiduciaries. Meanwhile, ISG received $145 million from retail and wholesale investors since 2019.

In many of the cases, members conduct a super health check online and submit their personal details and are incidentally contacted by the lead generator.

"The connections between them are something that we're looking at, and we're trying to see whether or not we can hold the lead generators to account, as well as those financial advisers that are involved in providing the environment," Court said.

"Ultimately, the financial advisers are the ones that are providing the advice to people to say you should roll your funds into something like the Shield Master Fund or First Guardian Master Fund."

Many investors assumed that because their investments in the Shield Master Fund or First Guardian Master Fund sat on a Macquarie platform, they were outright invested with Macquarie.

"The fact that they had this underlying investment into this complex Shield Master Fund has come as news to them. The documents that they saw, many had the Macquarie brand on them," she said.

"So, we are very concerned about that, and we are investigating [as ASIC has previously flagged at a parliamentary hearing last October] ... We are certainly investigating Macquarie and Equity Trustees and considering what options ASIC has available to them to hold them to account for what we think our failures are or certainly that's the way our investigation is progressing."

Court went on to say that ASIC has "invested heavily in these matters" and even diverted resources from other projects to super switching scams.

"Just to give you a sense of the scale of the work, we've set up a number of specialist investigation teams. We've executed a number of search warrants with the assistance of the AFP, we've issued stop orders to prevent these products continuing to be offered in the market, where that's available to us and that's protective action to prevent consumer harm," she said.