The board of the Australian Financial Complaints Authority has given indefinite extensions of the insolvent licensees implicated in Shield and First Guardian, due to concerns that investors impacted by the $1 billion collapse may not have had a chance to lodge a complaint.
However, no new cut-off date for both memberships has been made by the AFCA board, although it is understood that the indefinite extensions will not be permanent.
AFCA announced last September that the board approved the membership extensions of Next Generation Advice and United Global Capital to 31 March and 18 April 2026, respectively, for the same reason.
Professional Planner understands that the decision to do so is due to concerns that just over 2162 complaints have been made about the $1 billion managed investment scheme (MIS) failure (as of 10 February 2026), despite 12,000 investors being involved.
AFCA chief ombudsman and CEO David Locke said the decision was made to ensure all potentially impacted investors had the chance to make a complaint.
“The AFCA board has decided that no insolvent firm known to be involved in the collapse of the Shield and First Guardian Master Funds will be expelled from AFCA at this time,” Locke said in a statement.
“As with our decision to reinstate United Global Capital and extend the membership of Next Generation Advice, this is not a course of action we take lightly or regularly but it is the right course of action.
“It would not be fair to close off access to dispute resolution while there remains a significant group of investors who may not yet be aware of their loss, or of their right to lodge a complaint.”
UGC, Next Gen Advice, Financial Services Group Australia and MWL Financial Services are all in liquidation and have had their licenses cancelled by ASIC.
The other licensee – and only solvent one – implicated in the collapse is InterPrac Financial Planning which is owned by ASX-listed Sequoia Financial Group and is being sued by ASIC.
Sequoia had attempted to end a cross-guarantee between its subsidiary licensees which would have ended the sharing of liabilities until intervention from the corporate regulator.
MIS alert
The AFCA membership extensions for the advice firms comes as the Financial Advice Association Australia called for the inclusion of MISs within the scope of the Compensation Scheme of Last Resort as well as reforms that would enable AFCA to apportion blame for client losses across multiple parties.
Minister for Financial Services Daniel Mulino announced a new consultation into MISs in early February which was part of a suite of consumer protection reforms to come in place due to the aftermath of the Shield and First Guardian collapse.
“At present, the financial advice sector is paying for client losses related to MIS collapses, irrespective of whether failures also occurred within the MIS,” the FAAA submission, signed by CEO Sarah Abood, said.
“This anomalous situation urgently needs to be resolved, to ensure the sustainability of the CSLR.
“Amongst the most significant factors impacting the ability of these clients to get justice is the fact that clients of MISs are prevented from making a complaint to AFCA about the management of a scheme or fund as a whole.”
In opposition, Labor originally sought to include MISs in the CSLR before backing down after the Albanese government was elected in 2022.
To help mitigate the impact of future fund collapses, the FAAA also suggested the introduction of real time MIS reporting to ASIC to use as an “early warning system” for MIS failures, as well as the introduction of a super fund switching alert reporting regime.
The association argued some triggers that alert potentially harmful switching include high volumes of new business into limited investment options, flows from a limited number of licensees, large flow of clients from a single or small group of advisers and substantially higher than average adviser fees.
However, the FAAA said the consultation overlooked additional options that should be investigated including tighter approval processes for higher-risk MISs and strong personal liabilities for those operating the funds.
There should also be greater controls on wholesale trusts, the association argued, noting that registered retail trusts can invest in unregistered wholesale trusts that are less transparent.
The FAAA was also critical of the short time frame that was allowed for the consultation – less than three weeks – which meant there was limited time to engage with members or form a consensus view other associations.
