Super Members Council has argued that ASIC should include more examples of “modern aggressive” advertising tactics – like those used to lure investors into Shield and First Guardian – in its updated guidance on financial services advertising.
ASIC launched a consultation on Regulatory Guide 234 Advertising financial products and services (including credit) late last year, and the SMC submission comes as the Financial Services Council suggested that lead generators should fall under the remit of the guidance.
The SMC submission said the $1 billion Shield and First Guardian collapse exposed promotional techniques that represented an emerging distribution model that relied on online ads that were channelled people into “intensive” telephone sales staff.
“This interactivity of factors creates a complex new environment and evolving examples of misleading and deceptive conduct.
SMC chief executive Misha Schubert will be speaking at the Professional Planner Advice Policy Summit on 23-24 February where the industry and policy response to the Shield and First Guardian collapse will be a key topic.
The SMC submission suggested that to keep RG 234 relevant to emerging industry practices, ASIC should publish anonymised scripts and call excerpts that show first-hand how the Shield and First Guardian lead generation telemarketers worked.
“This collection would include calls made by lead generators and discussions with authorised representatives,” the submission said.
“These materials would help improve industry training and inform educational resources like MoneySmart content, ultimately enabling consumers to recognise future potential mis-selling strategies.”
ASIC acted against Shield and First Guardian over concerns investor money was being misused on high-risk investments, pet projects of the directors and personal expenses.
The funds grew due to a sophisticated network of lead generators that used online ‘superannuation health check’ advertisements and high-pressure sales tactics to refer victims to financial advisers.
ASIC has alleged that those lead generators and advisers involved received funding via investor money from Shield and First Guardian.
While ASIC has centred its investigation on the advisers, lead generators and managers of the funds, it is also taking action against adviser investment researcher SQM for inadequate reports on the funds, as well as Diversa Trustees and Equity Trustees over allegations both failed to conduct proper oversight when hosting the funds.
Macquarie and Netwealth have agreed to remediate members on their respective platforms.
The submission also recommended adding more “product-agnostic” examples on advertising of high-risk, illiquid, related party or offshore investment structures that look like super “alternatives” or “diversifiers”.
Outside of high-pressure sales tactics, the council suggested the updated guidance needed to include a focus on the application of AI in financial products and promotions, particularly as AI agents start to become prolific.
“The rapid expansion of AI into financial services over the next decade means RG 234 should explicitly address governance expectations for AI‑enabled promotion.
“The guide should make clear that licensees remain responsible for the design, testing and oversight of any AI systems used in advertising, recommendation engines or digital advice journeys, including controls for bias, data quality and model drift.
“Embedding high level AI governance expectations in RG 234 would align advertising practices with ASIC’s broader AI governance work and help ensure that promotional claims about AI capabilities are accurate, balanced and consistent with efficient and fair conduct obligations.
SMC chief executive Misha Schubert will be speaking at the Professional Planner Advice Policy Summit next month. Advisers, practice principals and licensee executives are eligible to attend and can register here.
