Funds collapse exposes loopholes
Could Shield and First Guardian happen again? What has been your experience with managed investment schemes? Should laws be tightened?
How to claim against Shield and First Guardian
Most people who invested in the Shield or First Guardian Master Funds dealt with a financial adviser or a super fund (or both). If your financial adviser or super fund did something wrong, you can complain and ask for them to pay you back.
You can do this through the Take Your Super Back website, which was developed by Super Consumers Australia to assist people affected by the Shield and First Guardian collapses. There are deadlines starting as early as 31 March 2026 to make complaints, but people are advised to make a complaint as soon as they can. Missing the deadline could mean failing to get any compensation.
So far, fewer than 2,000 of around 11,000 Australians who invested in these funds have lodged complaints. More information about how to lodge a complaint is available here.
It started with the collapse of two funds, but the scope of government and regulatory response has broadened to the popular investment vehicle of which those funds were part – managed investment schemes.
Australians have invested $2 trillion in such schemes, which represent a significant portion of the broader Australian managed funds industry, valued at nearly $4.75 trillion.
However, the collapse of Shield and First Guardian has exposed governance and regulatory shortcomings with this type of investment vehicle.
For more information on managed investment schemes, see later in this article.
The incoming chair of corporate watchdog, ASIC, Sarah Court, described the collapse of Shield and First Guardian as “industrial-scale misconduct”.
Assistant Treasurer, Daniel Mulino, cautioned, “High-profile collapses erode confidence, making Australians understandably nervous about investing and reducing participation in legitimate, well-regulated products.”
He said consultation on changes to the oversight of managed investment schemes was an “important step in ensuring our regulatory systems remain fit-for-purpose”.
The two funds collapsed in 2024 and 2025, taking with them $1.1 billion in retirement savings of 12,000 Australians. Liquidators have said just $1.6 million of $446 million tipped into First Guardian had been recovered, which is not enough to pay their fees.
Of special concern to the Federal Government, and ASIC, is that current regulations allowed the funds to “cold call” retirees to try to persuade them to switch from highly regulated super funds into less tightly regulated managed investment scheme products.
It has led Treasury to release a consultation paper canvassing ideas for greater regulatory scrutiny.
Share your experience
NSA is considering a submission to the consultation on stronger protections for investors. We want to gather information from our community to ensure we can reflect your experiences of and issues with managed investment schemes.
If you have ever invested in a managed investment scheme, tell us briefly about any negative experiences and if there are any regulatory protections that you would like to see introduced to reduce the risks to investors.
Email your response to policy@nationalseniors.com.au.
Managed investment schemes crackdown
ASIC observed that the funds’ collapses were characterised by financial misconduct, substantial governance shortcomings, and conflicts of interest, not merely bad investment choices.
As such, a new Treasury consultation paper has outlined the scope of possible government action, including:
- The amount of money fund operators should hold for emergencies
- Giving ASIC more powers to better manage the schemes, provide clearer oversight and visibility of superannuation switching, and demand information from funds and associated bodies.
"Good governance practices support sound decision-making by boards by ensuring they are well-informed, act in the best interests of investors, and are less susceptible to conflicts of interest," Mr Mulino said.
He said the Federal Government was considering additional action regarding superannuation switching, and the strengthening of superannuation trustee governance standards.
“There will also be consultation on ensuring the sustainability of the Compensation Scheme of Last Resort,” he said.
Call to shut down ‘predatory’ schemes
In related news, Super Consumers Australia (SCA) is urging the Federal Government to shut down what it calls predatory super switching schemes in the wake of the first Guardian and Shield collapses.
SCA says these schemes have been fuelled by “lead generators” who use social media platforms to collect people’s contact details and sell them on to third parties.
“These schemes are highly effective. They prey on people who are just looking to do the right thing and get on top of their super. They often start by simply offering a super health check but can end in people losing their life savings in high fees and dodgy investments,” said SCA CEO, Xavier O’Halloran.
SCA is calling for a ban on lead generation for superannuation and financial advice, as well as a closing of the loophole that allows cold calling offering financial advice.
What are managed investment schemes?
These are also known as “schemes” or “pooled investments”. Generally, in a managed investment scheme:
- Multiple investors contribute money or money’s worth and get an interest in the scheme. “Interests” in a scheme are a type of financial product and are regulated by the Corporations Act
- Money from the different investors is pooled together (often many hundreds or thousands of investors) or used in a common enterprise
- A “responsible entity” (also referred to as a fund manager) operates the scheme. Investors do not have day-to-day control over the operation of the scheme.
Managed investment schemes cover a wide variety of arrangements and underlying assets. Some examples include:
Managed investment schemes cover a wide variety of arrangements and underlying assets. Some examples include:
Cash management trusts
Property schemes
Australian equity (share) schemes
International equity schemes
Exchange traded funds (ETFs)
Mortgage schemes
Agricultural schemes (e.g. horticulture, aquaculture, viticulture)
Horse breeding and horse racing schemes
Time-sharing schemes
Serviced strata schemes.
Feedback opportunity
If you have ever invested in a managed investment scheme, tell us briefly about any negative experiences and if there are any regulatory protections that you would like to see introduced to reduce the risks to investors. Email your response to policy@nationalseniors.com.au.
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