ASIC probes super switching advisers

Lead generation is a marketing activity designed to create consumer interest in a product or service, with the goal of persuading consumers to purchase the product or service.

These services use a range of marketing techniques to introduce consumers to financial services businesses – including some businesses that encourage consumers to switch their super.

The Australian Securities and Investments Commission (ASIC) have now named lead generators and the financial advice groups that have used them as part of its response into the $1.2 billion collapse of Shield Master Trust, First Guardian, and Australian Fiduciaries.

ASIC is reviewing and naming advice licensees using lead generation services to address practices that inappropriately or unnecessarily encourage consumers to switch their super.

Also, ASIC is warning consumers to be careful when sourcing advice from advisers who cold-call and attempt to persuade them to change their superannuation funds. There is more on how you can take precautions a little later in this article.

Among the lead generators that have been named, many have websites that contain search terms people might use if they were looking to switch super, including such names as “checkmysuper”, “mysupercheckup”, and “mywealthhub”.

“Hiding behind those innocuous brands and promises are often really harmful practices… they’re all about trying to encourage people to switch their super from something safe into something that’s unsafe,” ASIC commissioner, Alan Kirkland, said.

“We think it’s important, case by case, to name businesses that come up in the course of our work. And it’s particularly important in this area given the strong public interest in lead generation and some of the harm that we’ve seen it cause.”

Mr Kirkland emphasised the named businesses or individuals had done anything wrong. However, they are on notice and will be contacted by ASIC to see if they were following the law. 

ASIC has published a list of known entities involved in lead generation, those acting as referral partners, and advice licensees or corporate authorised representatives that have acquired leads, since 1 July 2024.

ASIC has advised financial advisers and advice licensees to carefully consider whether they are able to comply with their legal obligations if engaging with lead generation businesses or undertaking lead generation activities that include these features.

Superannuation trustees should review this list of features and compare it with their own internal data for indications of high-risk superannuation switching conduct.

ASIC warns that lead generators that mislead consumers, use high- pressure tactics, or provide financial services without a licence risk contravening the law, as do licensed persons or entities that engage the services of lead generators acting in this way.

Meanwhile, Super Consumers Australia chief executive, Xavier O’Halloran, has called for anti-hawking loopholes to be closed by banning lead generation in super and financial advice.

“Decisions about super can have lifelong impacts. It is far too important to leave to cookie-cutter advice over the phone,” he told the Australian Financial Review.

“The cost of poor consumer protections is currently falling on everyone, through direct losses, compensation scheme funding and increased age pension costs,” he said.