Netwealth will pay the 1000 First Guardian investors on its platform more than $100 million in compensation after admitting that it contravened the Corporations Act.
Similar to Macquarie’s agreement with ASIC, Netwealth members will be compensated 100 per cent of the amounts they invested in First Guardian minus any amounts withdrawn, with the payments due on 30 January.
On Thursday morning, ASIC announced it had commenced proceedings in the Federal Court against Netwealth Superannuation Services and Netwealth Investments Limited, as trustees of the Netwealth Superannuation Master Fund.
Netwealth will admit it failed to obtain sufficient information about First Guardian before placing it on the platform for investors.
In an announcement to the ASX, Netwealth said the compensation will be recorded as an “extraordinary” expense in 1H26, impacting net profit after tax (NPAT) by approximately $71 million. In FY25, Netwealth reported NPAT of $116.5 million.
The compensation agreed to by Netwealth means its application for assistance from the government under Part 23 of the Superannuation Industry Supervision Act has been withdrawn. Netwealth had applied for a grant for government assistance to compensate the affected investors on its platform, similar to that made by the government to compensate investors in the failed Trio Capital more than a decade ago.
In a statement, the Minister for Financial Services, Daniel Mulino, said he welcomed ASIC’s action against Netwealth, and also welcomed “action taken by APRA today that follows their thematic review of platform providers”, which included additional licence conditions imposed on Equity Trustees Superannuation Limited (ETSL) due to lack of governance and oversight.
Among the conditions is a prohibition on Equity Trustees “onboarding certain new high-risk investment options to its platform until an independent expert confirms the option has gone through the uplifted onboarding process and an accountable person attests that all reasonable steps were taken to ensure the option is in members’ best financial interests”.
A spokesperson for EQT told Professional Planner the firm is “committed to active engagement and co-operation with the regulators” and that it had “already been undertaking an uplift in investment governance, and has established plans to do more, which it considers aligns with APRA’s new requirements”.
ASIC’s actions also received support from a traditionally outspoken critic of the regulator, Shadow Minister for Financial Services, Pat Conaghan.
“I’ve been clear where ASIC has fallen short, but I’ll also give credit where it’s due,” Conaghan said in a statement. But he added that “those who allowed this to happen must be held accountable, and that includes the government”.
“This is the biggest superannuation failure in Australia’s history. The Treasurer was warned at least seven times by his own department about problems with the regulation of managed investment schemes — schemes just like First Guardian — yet chose not to act.”
Netwealth’s compensation payment will be funded by a mixture of cash and debt.
Netwealth has also agreed to an enforceable undertaking with APRA requiring an uplift of its investment governance process, which will be overseen by an independent expert.
Netwealth managing director Matt Heine said the firm believes the losses suffered by affected members were primarily caused by fraudulent conduct.
“We also recognise that it is important for us to review and further uplift our onboarding and monitoring processes in relation to the investment options we make available to our members,” Heine said.
Netwealth’s agreement to accept culpability in the collapse in First Guardian will offer to relief to investors as liquidators have so far only been able to claim $1.6 million from the $480 million fund.
All up, around 11,000 investors lost over $1 billion in the collapse.ASIC has moved against Shield and First Guardian due to governance concerns about the schemes and misuse of investor money.
Macquarie and Netwealth were the two branded platforms that were their own trustee; trustees-for-hire Equity Trustees and Diversa Trustees are fighting ASIC in court.
Licensees InterPrac Financial Planning and MWL Financial Services, and researcher SQM all have active court cases.
ASIC Deputy Chair Sarah Court said the ongoing investigation into First Guardian, including work to recover available money for investors, was at the heart of ASIC’s enforcement priorities.
“This is a welcome outcome for many Australians and stems the significant losses that threatened their retirement savings,” Court said.
“More than 1000 members who invested through Netwealth’s superannuation platform were facing huge uncertainty when First Guardian collapsed. ASIC’s investigation will ensure Netwealth restores these members to the position they were in before they saw their savings eroded.”
ASIC will not seek a pecuniary penalty due to the exceptional circumstances of this matter, instead prioritising arrangements whereby the trustees are instead remediated rather than dragging out lengthy court proceedings.
Court said the regulator has 12 cases underway against 20 defendants and is continuing to investigate misconduct related to Shield and First Guardian.
“The action we’ve taken in the last few months puts super trustees well on notice: they are gatekeepers for their members’ retirement savings and ASIC expects them to take active steps to monitor the funds they make available on their choice platforms,” Court said.
