The federal opposition has welcomed the blockbuster deal that will see Macquarie remediate Shield members on its platform but has criticised the government for not taking more proactive action.
Minister for Financial Services Daniel Mulino had welcomed the news that hundreds of millions in retirement savings would return to affected members, but shadow Minister for Financial Services Pat Conaghan warned it does not go far enough, with only 3000 of the 11,000 Australians impacted by the collapse benefitting from the arrangement.
“This acknowledgment by Macquarie is an important step forward,” Conaghan said.
“But it doesn’t erase the stress and financial pain endured by thousands of Australians – nor does it deliver justice to those excluded from the agreement.”
Conaghan said a “fundamental question remains” about lack of government prevention, reiterating his criticism of Labor burying its own managed investment scheme (MIS) review.
“The review should have been completed over a year ago,” Conaghan said.
“Could its recommendations have prevented losses from Shield, First Guardian or Lion Property Group? We won’t know until the government releases the review.”
“This government was warned – and chose not to act. While the MIS review gathered dust, consumers were exposed, and the red flags were ignored. Had the government acted earlier, it’s fair to ask whether some of these losses could have been avoided.”
Conaghan criticised the “silence” of senior government figures including Prime Minister Anthony Albanese, Treasurer Jim Chalmers and Minister for Financial Services Daniel Mulino despite the impact the collapse has had on 11,000 Australians.
While the Prime Minister and Treasurer have not put out a public statement, the shadow minister’s office did not confirm by time of publication whether opposition leader Sussan Ley or shadow Treasurer Ted O’Brien had any comment on yesterday’s announcement either.
Minister for Financial Services Daniel Mulino released a statement yesterday afternoon that said the Macquarie deal was an important reminder to all platform providers of their obligations to protect customers.
“While this action does not make up for stress that these investors endured or the foregone returns that these investors would have received, it will enable affected customers to access their retirement savings without the need for lengthy and costly court proceedings,” Mulino said.
“Importantly, it does not limit their right to pursue further actions. As minister I am also engaging regularly with ASIC, my department, and with key industry stakeholder groups in order to better understand the drivers of conduct that have led to these collapses, and how we can work together with the sectors to implement sensible reforms that better protect consumers in the future.”
The Australian Financial Review reported on Thursday night that the government is planning super investment reforms, but a senior government source told Professional Planner the newspaper had made “wild guesses” about the detail from the minister’s statement.
Association of Independently Owned Financial Professionals executive director Peter Johnston credited the agreement between Macquarie and ASIC as it gives some acknowledgement of the role played by others in the advice chain.
“For the last 20 years the Macquarie Group have been widely hated by the advice profession for the failure of their own structured products and arrogance of their executives,” Johnston said.
“This image has now dramatically changed with just one act which ASIC also deserves great credit for. ASIC has done consumers and the advice profession a great favour by applying pressure on Macquarie to stump up the cash, we now wait for the other stakeholders to put their collective hands up.”
ASIC commenced enforcement action against First Guardian and Shield due to concerns about conflicts of interest with directors in the fund, misuse of investor money and mislabelling of the risk profile of the products.
The regulator also alleged that advice firms received payments from the Shield and First Guardian funds which in turn used lead generation services to funnel customers into the funds without factoring in their best interests.
