Shield, First Guardian growth was captured in APRA performance test data

APRA’s performance test captured the fast inflows of Shield and First Guardian, but the prudential regulator says it didn’t have the capability to investigate any red flags in the data.  

APRA confirmed to the Senate Economics Legislation Committee onFriday that total assets in the combined funds grew from $25 million in 2021 to $982 million in 2025, based on data collected by APRA through trustees for the performance test.

The data was presented at the request of the committee, where  APRA chair John Lonsdale said the prudential regulator’s role was to collect data for a whole-of-system view but that oversight of managed investment schemes (MISs) was the role of the trustees and oversight of conduct was the responsibility of ASIC.

“We retain a lot of data and the way that we do that and the way that we supervise is through the standards and through the law,” Lonsdale said.

“What I mean by that is… that’s the same across industries. There’s half a million mortgages written in this country each year. APRA does not vet these mortgages.”

The first performance test ran in 2021 but was expanded to platform choice products in 2023.

Shield was registered with ASIC on 24 May 2021, and First Guardian was registered on 23 August 2019.

Lonsdale said Shield and First Guardian were among 700 other platform products that had a similar growth trajectory, and that APRA wasn’t resourced for a granular level of MIS oversight.

“You would have to look product by product and that is not a regulatory system that we have,” Lonsdale said.

“To have that system would involve a lot bigger resource commitment… to examine thousands of products which we don’t because the law is not configured that way and we have a law that says it is the trustees’ responsibility.”

APRA deputy chair Margaret Cole said while the data looked “stark” that’s not how it appears within APRA’s systems.

“If we were to pull this sort of data and produce charts on other products you would probably see things as stark,” Cole said.

ASIC has been handed the responsibility of taking more oversight of MISs, receiving $17.8 million in the May Federal Budget to commence an oversight program after facing heavy criticism in the aftermath of the collapses for not intervening earlier.

ASIC chair Sarah Court told Professional Planner last month the program would involve data sharing with APRA.

Asked earlier in the day by Liberal Senator Paul Scarr whether there are any other potential MISs that were “ticking time bombs” that could blow up – given the trustees were still run by the same people – Court said this was the reason they had undertaken multiple court actions against the trustees involved in onboarding the Shield and First Guardian funds.

“We are trying to send a message to the broader sector about trustee obligations and those funds that you make available to your members,” Court said.

In the aftermath of the collapse of Shield and First Guardian, APRA has added license conditions on Equity Trustees and Diversa Trustees and received a court enforceable undertaking on Netwealth to lift onboarding standards. Macquarie received a similar court enforceable undertaking from ASIC.

The added licence conditions mean the trustees are required to hire an independent expert to undertake reviews of product onboarding processes and investment menus, particularly as it pertains to high-risk investment options.

Netwealth has remediated First Guardian clients while Macquarie compensated Shield investors on their respective platforms. Diversa Trustees, which held First Guardian, and Equity Trustees, which held both funds, are fighting allegations of due diligence failures in court.

Investments in Shield and First Guardian grew due to a sophisticated network of lead generators that contacted people who used online “superannuation health check” advertisements and applied high-pressure sales tactics to refer them to financial advisers.

ASIC acted against the Shield and First Guardian funds over concerns that investor money was being misused on high-risk investments, pet projects of directors and personal expenses, and court proceedings against both funds are ongoing.

ASIC has also acted against advisers and licensees allegedly responsible for distributing the funds but has also been critical of the “gatekeepers” – the trustees and researcher – that helped give credibility to the funds, with SQM Research  now in court for allegedly providing insufficient research reports that gave the funds an “investable” grade.

The government has launched multiple consultations to change the law to add further consumer protections, covering sustainability of the Compensation Scheme of Last Resort, trustee oversight, lead generators, professional indemnity insurance and MISs.