Editor’s note: this article discusses themes of depression and mental health. If any of these topics raise concerns or issues for you, you can contact Lifeline on 13 11 14 or Beyond Blue on 1300 224 636.
When the First Guardian and Shield Master Funds collapsed, thousands of Australians woke up to something they never imagined possible: their retirement savings, years, and in many cases decades, of work, had disappeared.
For many, the balance didn’t slowly dwindle or show warning signs. It simply went from six digits to zero. Superannuation, which every Australian is compelled to contribute to, suddenly wasn’t the safety net they believed it was. It was clear that the trust they had placed in advisers, trustees, platforms and regulators had not been enough to protect them.
Worse still, their trust in government was shattered like glass. As each party in the chain focused on shifting blame, the human cost was forgotten, leaving individuals to carry the emotional toll and mental health fallout alone.
Over the last several months, through SOS Save Our Super, a group that has grown into a lifeline for many of the 12,000 victims, I’ve listened and talked to people who have lost sleep, health, marriages, and in some cases, hope. We (myself and fellow victim Danielle Adams) have helped hundreds lodge complaints with AFCA, locate lost documents, or simply understand what happened to them. I have taken late-night calls from men in their seventies crying down the phone, spoken with women who cannot bring themselves to tell their children and even husbands that their superannuation is gone, and supported people who are now working two jobs deep into their sixties because they no longer have a retirement to look forward to.
This collapse isn’t just financial. It is emotional, psychological, and deeply personal. And in trying to help people navigate AFCA, it became painfully clear that the system itself was overwhelmed.
Last week, I met with AFCA. Their honesty was welcome, and their commitment genuine. But what stood out most was the scale of the constraints they face. AFCA is not failing because its staff are careless or indifferent. AFCA is failing because it is operating inside a framework designed for small, contained disputes, not a 12,000-person collapse involving multiple advice channels, trustees, platforms and a registered managed investment scheme.
AFCA must treat every complaint individually. Even when thousands of people were placed into the same failed products through the same funnel, a lead generator, an adviser, a licensee, a trustee, a platform, AFCA cannot group these cases, streamline them, or issue a single determination covering a cohort. It is legally required to investigate and determine each one separately. It is, in effect, attempting to apply a boutique process to a catastrophe.
The problem with InterPrac
Then there is the issue of InterPrac Financial Planning, the only solvent licensee caught in the collapse. AFCA confirmed that InterPrac is challenging AFCA’s jurisdiction in key lead cases, something it is fully entitled to do. But the consequence is devastating; thousands of cases that sit behind those leads are effectively stalled until the challenge is resolved. One licensee’s delay becomes the entire nation’s delay. Where is the integrity and humanity to do what’s right and just?
And the document problem is even more concerning. Many victims cannot locate their Statements of Advice, often because they were emailed years ago, lost during computer upgrades, or never properly saved. AFCA tries to retrieve these documents from liquidators, but liquidators have told them they lack funding to search, that they already provided documents once, or that client files are incomplete or missing. Without documents, AFCA cannot progress cases. Investors cannot rebuild their files from memory. The entire process grinds to a halt.
Even when AFCA can determine a case, another structural flaw emerges. Historically, AFCA could require a licensee to take over the units of a failed investment and compensate the investor in full. But once a determination goes to the CSLR, that mechanism disappears. CSLR is capped, inflexible, and unable to replicate AFCA’s traditional full-compensation tools. This means two people with identical cases can receive vastly different outcomes depending solely on whether their licensee is solvent.
None of this is fair. None of this is the fault of the victims. And none of this is within AFCA’s control.
For months, I’ve been working with investors, preparing detailed spreadsheets and timelines, documenting inconsistencies, and tracking the progress of cases across licensees. When I met AFCA, I provided the data. Some cases lodged months later had moved ahead, while others submitted earlier remained untouched. There were anomalies everywhere. AFCA explained some of these, such as their new “prep team” calling unrepresented complainants, but other questions remained open, especially around inconsistent prioritisation and the lack of visibility for complainants who want to know where they stand.
Outside investors control
This uncertainty is crushing people. Not because they expect miracles, but because they expect a system capable of telling them where they are in the queue, something most modern systems, from airlines to service centres, can do with a tap of a button.
The truth is simple: AFCA cannot fix these problems alone. The system itself must change.
That is why I have now submitted a detailed briefing paper to Minister for Financial Services Daniel Mulino, Shadow Treasurer Ted O’Brien and Shadow Minister for Financial Services Pat Conaghan outlining reforms that would allow AFCA to operate effectively, not just for this collapse, but for the next mass harm event, which is only a matter of time. I have asked them to lead the necessary legislative and structural changes so AFCA can deliver outcomes efficiently, consistently, and fairly.
These reforms include emergency surge funding, mandatory cooperation from liquidators, stronger obligations on licensees to engage with AFCA, a streamlined single-entry complaints pathway, a transparent queue system, clarity around CSLR’s timing and compensation mechanisms, and legislative authority for AFCA to issue batch or streamlined determinations in large-scale collapses. Most importantly, I have asked for alignment between AFCA’s compensation powers and CSLR’s limitations, so victims are not punished simply because their licensee happens to be insolvent.
I am calling on Minister Mulino to act swiftly. Australians cannot be left waiting months or years for answers while their homes, health, and livelihoods deteriorate. The system needs urgent repair. AFCA’s staff are working hard, this is not their failure, but they are being asked to perform an impossible task with outdated tools.
The victims of First Guardian and Shield have already lost too much. They deserve a process that delivers clarity, progress and resolution, not silence and indefinite delay. The government must step in and support AFCA with the reforms necessary to ensure that no group of Australians ever suffers this way again.
Because behind every complaint is a person, a family, a life. And every day without progress is another day that life remains on hold.
Melinda Kee is a First Guardian investor and now leads SOS Save Our Super which is advocating for the restoration of the retirement savings of the roughly 12,000 Australians caught up in the failed Shield and First Guardian funds.
I have made this comment more than 10 times so far. When I began as a financial adviser in 1983, all retail financial products had a public trust company hold all assets at the cost of a fraction of 1% per annum. It also monitored the fund manager’s investment mandate. Then Canberra changed rules to Responsible Entity and since, $billions have been lost to frauds and advisers who do not handle client’s money get blamed. The industry structure has to change back to Public Trust companies to hold the assets and fund managers give transaction instructions for the investments held by Public Trust companies. The EU AIFMD uses a custodian as the external holder of clients’ assets.