Macquarie has agreed to a landmark deal with the corporate regulator to return hundreds of millions of dollars to investors in the failed Shield Master Fund, but questions remain over how this will impact the Compensation Scheme of Last Resort or whether other trustees will follow Macquarie’s lead.
ASIC announced on Thursday morning that Macquarie Investment Management has agreed to remediate $321 million in super investments into Shield for around 3000 members of the Macquarie Superannuation Plan.
Members will receive 100 per cent of the amount they invested in Shield by 30 September 2025, less any amount they might have withdrawn.
Furthermore, Macquarie has admitted it contravened the Corporations Act and did not provide financial services efficiently, honestly and fairly by failing to place Shield on a watch list for heightened monitoring. However, it will avoid scrutiny for approving the managed investment schemes (MIS) in the first place.
Sources inside Macquarie told Professional Planner the financial services giant will claw back what it can from Shield liquidators, which it currently estimates will be about 70 cents in the dollar. Any shortfall will be “absorbed” by the company’s balance sheet.
Macquarie’s decision to not fight ASIC in court and instead remediate clients avoids a further PR disaster for the broader group and will settle the matter in a timely manner for investors, which the regulator noted in its submission to the court was a justification for not seeking a civil penalty.
Macquarie will purchase investors’ holdings in Shield at their current fair value, based on the estimated ultimate recovery from the liquidation process.
“Macquarie’s decision to devote resources to achieve this outcome recognises Shield’s unique circumstances, notably the scale of the issue, its material impact on many investors and their limited access to recourse from the many different entities which played a role,” Macquarie said in a statement.
“The approach of providing immediate certainty and an improved outcome for investors benefits all parties.”
The regulator said Macquarie admitted the allegations in the proceedings, but it is a matter for the court to determine whether the declarations are appropriate.
ASIC deputy chair Sarah Court said the regulator’s investigation will see these members return to the position they were in before their retirement savings were eroded by the collapse of the fund.
“Many members thought their funds were safe when they used Macquarie’s super platform to invest in Shield, which had no track record,” Court said.
It also means the operational financial risk requirement reserve for Macquarie Investment Management won’t be tapped into – a path to compensation that has previously been pushed by ASX-listed Seqouia, owner of the InterPrac Financial Planning licensee which authorised key advisers under investigation by ASIC for their involvement in moving members into the Shield and First Guardian funds.
Seqouia group CEO Garry Crole said a team of salaried advisers in Melbourne and Perth will support affected clients by getting their accounts reinstated by Macquarie and providing advice on their funds in coming days.
“We will continue to collaborate with regulators, trustees, and policymakers to ensure that confidence in Australia’s superannuation system remains strong, and that members are always placed at the heart of decision-making,” Crole said.
Minister for Financial Services Daniel Mulino praised the agreement and said the admission from Macquarie is an important reminder to all platform providers of their obligations to protect customers.
“While this action does not make up for stress that these investors endured or the foregone returns that these investors would have received, it will enable affected customers to access their retirement savings without the need for lengthy and costly court proceedings,” Mulino said.
“Importantly, it does not limit their right to pursue further actions. We recognise, however, that this remains a deeply distressing time for many investors in Shield and First Guardian who are not covered by this action.
“ASIC is continuing to explore all options to hold parties to account and ensure that investors, where possible, are remediated. Our thoughts are with those individuals and families who are still facing uncertainty and hardship.”
The collapse of Shield and First Guardian has become one of the corporate watchdog’s highest priorities with $1.2 billion of retirement savings across 11,000 investors at risk.
CSLR implications in question
Macquarie’s client remediation doesn’t necessarily mean investors cannot raise complaints to the Australian Financial Complaints Authority and the Compensation Scheme of Last Resort.
Clients can still make a complaint to AFCA and under the so-called “but for” principle could still theoretically receive a determination that would reimburse them for missed capital gains due to poor advice.
The controversial “but for” provision has come under scrutiny and the role it plays in the CSLR process is expected to be addressed pending the results of a review into the scheme. The scheme believes this would reduce advice complaints by 80 per cent.
CSLR chief executive David Berry conceded it was unknown how Macquarie’s move would impact the scheme, given its unprecedented nature.
“We need to catch up with ASIC to get some of the details of the agreement, it would obviously reduce the compensation requirement on the scheme which we’re excited about as well,” Berry told Professional Planner.
“The decision today from Macquarie will be bring a great sense of relief for so many that have been the victims of an overall bad situation.”
AFCA lead ombudsman for investments and advice Shail Singh said the dispute resolution body is also considering the implications for complaints lodged with AFCA.
“In the interim, consumers can still lodge complaints at AFCA about any party involved in their investment journey with Shield Master Fund,” Singh said.
Berry said other unknowns remain about the impact Shield and First Guardian will have on the scheme but he believes that the next six months will provide clarity that will be incorporated into a revised levy estimate in July next year.
The scheme expects that in FY27 some claims related to the collapsed funds will begin to be paid, but Berry notes that although Shield and First Guardian are frequently lumped together, they’re very different situations.
“ASIC action earlier this year was able to freeze more assets with Shield than First Guardian,” Berry said.
“We are yet to see what this means for potential impact on the industry levy in relation to both Shield and First Guardian.”
Trustees next
Shield was offered on NQ Super and DASH’s Super Simplifier platforms, for which Equity Trustees was trustee, while First Guardian was offered on NQ Super/Freedom of Choice.
Diversa Trustees was also trustee for several platforms that held First Guardian: OneVue’s Your Choice Super, Australian Practical Superannuation and Praemium Super.
Netwealth also hosted the First Guardian funds, while Macquarie hosted only Shield.
ASIC is investigating Netwealth and Diversa Trustees, and is suing Equity Trustees for due diligence failures, which EQT said it would fight in court.
Equity Trustees declined to comment on Macquarie’s arrangement with ASIC and whether it would pursue a similar deal, but a source involved with the group told Professional Planner they believe their circumstance is different and that other avenues of industry remediation should be leveraged.
Of particular note to the group was that Macquarie’s brand was on the platform presented to clients, which wasn’t the case for Equity Trustees and so culpability rests with the advisers involved in the scheme.
Super Consumers Australia chief executive Xavier O’Halloran said in a media release the organisation was pleased Macquarie was “reaching into its own pockets” to do right by its members.
“By putting Shield on its shelves and keeping it there well after it started to rot, Macquarie risked the retirement savings of thousands of its members,” O’Halloran said.
“After over a year of anguish, these people have a chance at a dignified retirement.”
The consumer advocacy body has previously called for trustees to remediate members and O’Halloran told Professional Planner that Macquarie has set “a moral precedent for super funds to compensate when they’ve failed to protect people’s super”.
“Macquarie taking responsibility for its part in this mess is a big win for 3000 people, but there’s another 9000 or more people out there who’ve also lost their life savings,” O’Halloran said in the release. “We need to see the other super trustees covering their share of the bill.”
Financial Advice Association Australia policy general manager Phil Anderson praised the outcome, which he said will help to restore confidence in the superannuation system.
“We also recognise the efforts of ASIC to negotiate this outcome and appreciate that it will place pressure on the other super funds to take similar action,” Anderson said.
“This is a very good outcome for these clients who have been so badly impacted by the collapse of this MIS. Hopefully this will provide relief for them in what has been a very difficult and challenging experience.”
