The Albanese government will ban unlicensed telemarketers from cold-calling Australians and persuading them to switch superannuation accounts under a major new crackdown aimed at protecting retirement savings.
Financial Services Minister and Assistant Treasurer Daniel Mulino will use his first National Press Club address on Wednesday to unveil a tougher penalty regime for breaches of anti-hawking laws, while also restricting advisers from proactively contacting prospective clients.
Under the reforms, financial advisers would only be allowed to initiate contact with existing clients. Advisers will also be held more accountable for the conduct of third-party lead generators they engage, in an effort to prevent another collapse like those of the Shield and First Guardian schemes.
"These reforms are designed to disrupt some of the most damaging business models operating in the system today," Mr Mulino is expected to say, according to extracts released by his office.
The crackdown forms part of the Australian government's response to a web of conflicted advice, commissions and aggressive marketing that allegedly lured investors out of mainstream superannuation funds and into doomed investment schemes.
In Australia, superannuation is the compulsory retirement savings framework where employers make contributions on behalf of workers. Many victims of the Shield and First Guardian collapses were exposed to third-party businesses, known as lead generators, by plugging their details into online super health check services to see if they were on track for retirement.
During his address at the National Press Club in Canberra, Mr Mulino will outline government plans to "make the financial system safer across the superannuation, advice and investment ecosystem." His speech is also widely expected to consider the future of the Compensation Scheme of Last Resort, which provides financial redress to consumers who have suffered uncompensated losses from financial misconduct.
Allegations of siphoned funds and luxury purchases
The regulatory crackdown comes as Australia's corporate watchdog, the Australian Securities and Investments Commission (ASIC), conducts multiple investigations into the First Guardian Master Fund and its directors, including David Anderson.
ASIC alleges that Anderson siphoned millions of dollars from the fund into his personal ANZ bank account. The watchdog further alleges that Anderson moved $274 million offshore after learning he was under investigation.
Before the fund collapsed, Anderson purchased a $9 million mansion in Hawthorn, an affluent inner suburb of Melbourne. Fellow director Simon Selimaj, 63, had a $548,000 Lamborghini Urus registered in his name, which liquidators allege was bought using money linked to the fund.
Liquidators report that just $1.6 million has so far been recovered from the $1.2 billion collapse, leaving thousands of victims facing total losses.
Support from victim advocacy groups
First Guardian investor Melinda Kee, who leads advocacy group SOS Save Our Super, welcomed the government's reforms.
"For many First Guardian and Shield victims the road to losing their retirement savings began with something as simple as a phone call or an online advertisement," Ms Kee told the Daily Mail.
"Tightening the rules around lead generators and making licensees accountable for the leads they accept is an important reform," Ms Kee said. "Australians should never be funnelled to risky financial products simply because someone was paid to find them."
Ms Kee noted that more than 11,000 Australians have "already paid an enormous price" for the systemic failures the reforms are designed to address.
Devastating losses for Australian retirees
Among those affected is Tess Ogara, a teacher who spent more than four decades building a $500,000 retirement nest egg. She was left shattered just days before her 65th birthday when she discovered her life savings had vanished into the failed First Guardian investment scheme.
"I am furious at the financial adviser who allowed my investment to be structured this way without making it clear to me that it was high risk," Ms Ogara told the Daily Mail.
"I did not sleep a wink for the first couple of nights and, for months afterwards, would wake up in the middle of the night replaying over and over again how I had ended up in this position," she said. "The thought of losing that much money - money I had spent more than 40 years accumulating - was so devastating... I couldn't cope."
To make ends meet, Ms Ogara said she has had to rent out a room in her house.
"I cannot see any way of retiring for at least another 10 years unless the government helps cover my losses now and then seeks to recover the money through the courts," she said.
