The failures of the Shield and First Guardian Master Funds will dominate ASIC priorities this financial year, with reviews into managed investment schemes, SMSF establishment advice and high-risk super switching also either to be commenced or in full swing.
The Shield and First Guardian failures have led to the loss of around $1.2 billion in retirement savings of 11,000 investors after investors were called by lead generators and referred to financial advisers who used high-pressure sales tactics to convince investors to rollover their superannuation fund onto a choice platform hosting the Shield or First Guardian funds.
ASIC halted new investments into Shield and First Guardian due to concerns the products were higher risk than labelled, as well as concerns over conflicts of interest and fraudulent activity with member funds.
In its FY26 corporate plan released today, ASIC will “enhance” the process of early detection for high-risk managed investment schemes to help with targeted surveillances, particularly where those products are used to invest retirement savings through an SMSF.
The regulator will also conduct a review of superannuation trustee practices to “better understand” the policies in place to “disrupt” high-risk super switching models that have emerged.
This will build on the work of Report 781 Review of superannuation trustee practices: Protecting members from harmful advice charges and Report 779 Superannuation and choice products: What focus is there on performance?
There will also be a review of AFSLs that use lead generation services, following the 2024 review which identified the use of high-pressure sales tactics that led to super switching. The new review will focus on how industry practices have changed since then.
The regulator will continue its surveillance of personal advice provided to retail clients on SMSFs with results expected by the end of the year.
The SMSF review is centred around the advice given to establish an SMSF, as well as assessing the quality of the advice given, and the policies and procedures of AFSLs.
Equity Trustees sued
The release of the corporate plan comes as ASIC revealed on Tuesday morning it was suing Equity Trustees for alleged due diligence failures regarding Shield.
It’s alleged that Equity Trustees oversaw $160 million of retirement savings invested into Shield and failed to act in the best financial interests of its members as a superannuation trustee.
Equity Trustees is the trustee for NQ Super and Super Simplifier and approved the four classes of Shield as investment options.
ASIC also has an ongoing investigation into Equity Trustees in relation to the onboarding and ongoing monitoring of First Guardian.
Macquarie is also alleged to have hosted the Shield fund, while Netwealth, Praemium and Diversa Trustees hosted First Guardian.
ASIC is investigating the responsible entities of the Shield and First Guardian funds, as well as its directors and officers. It’s also investigating the super trustees, financial advisers, lead generators and research houses involved.
ASIC revealed in July it had more than 40 investigators working across Shield and First Guardian and has been in court more than 40 times on related matters.
Managed accounts under review
While high-risk super switching will dominate the regulator’s resources, ASIC will also expand its work on managed accounts.
ASIC will conduct a surveillance of AFSLs recommending and offering managed accounts to retail clients that will take into consideration compliance with general licensee and advice conduct obligations.
The surveillance will focus on governance frameworks, management conflicts of interest and outcomes for consumers.
ASIC will continue its review of offshoring arrangements from AFSLs and how they are managing risk with data sharing and privacy.
Market participants’ compliance with market integrity rules on managing outsourcing arrangements and reliance on third-party vendors, including those widely used but not regulated as providers of financial services, will also be assessed.
With the approaching 1 January 2026 deadline to either have an approved tertiary degree or proof of eligibility for the 10-year experience pathway, ASIC will be monitoring the veracity of the Financial Advisers Register.
ASIC had previously announced a compliance program would be undertaken at the start of next year to check FAR records.
Work will also be done to assist Treasury to help deliver guidance on the remaining traches of the Delivering Better Financial Outcomes reforms.
Currently, only one tranche of legislation has passed Parliament, with draft legislation covering part of the remaining policy proposals having been released.
New Minister for Financial Services Daniel Mulino said at the Retirement Leaders Summit, co-hosted by Professional Planner published Conexus Financial and its philanthropically think-tank The Conexus Institute, that the remaining draft legislation would be released this year.
Better results for members
ASIC will also commence the next phase of its multi-year member services review, which will cover how funds use complaints data to identify and address systemic issues.
The regulator will assess whether there has been improvements following damning Report 806 Taking ownership of death benefits: How trustees can deliver outcomes Australians deserve which underscored the depth of claims handling issues from super funds.
“Where we identify poor conduct, we will take enforcement or regulatory action aimed at driving improved services for superannuation fund members and improved retirement outcomes,” the regulator’s corporate plan said.
The corporate watchdog will also continue its deep dive into retirement-focused member communications, decision-making processes and guidance tools delivered from super funds as part ongoing monitoring of industry practice following the implementation of the retirement income covenant.
There will also be a joint “pulse check” project conducted with APRA to monitor the progress of super funds with implementing their strategies under the covenant and to inform the design of the Retirement Reporting Framework which is currently being consulted on by the government.
Super Consumers Australia is the ultimate quango. Spun off from Choice, their funding is essentially from the government.
When I’ve contacted them about deficiencies in the super sector, they didn’t even bother responding. Pretty much just government funded activists.
Of note, it was the Liberal government which started funding them.