Over 17 months, unqualified and unlicensed telemarketers urged Australians to switch about $678 million of their investments — mostly their superannuation savings — into riskier schemes.
That is among the findings the corporate regulator, the Australian Securities and Investments Commission (ASIC), unveiled today in a review focusing on 15 Australian financial services licensees operating between January 2025 and June 2026.
The report looked at the practice of telemarketers, also known as lead generators, using social media advertising and telephone calls to identify consumers and introduce them to licensed financial advisers.
These advisors would then switch their superannuation out of APRA-regulated funds in a practice known as lead-generation.
Earlier this year, ASIC announced it would be looking into the firms that allow these lead generators to operate.
The regulator found that the licensees obtained about 7,639 new clients through lead generation services over the period, which represented about 35 per cent of total new clients for these licensees.
This resulted in more than $678 million being switched or invested, with about 90 per cent coming from superannuation savings.
Licensees deducted $9.8 million in up-front advice fees from clients and clients agreed to a further $4.5 million in annual ongoing fees.
ASIC says the high-profile collapses of Shield and First Guardian — which left almost 12,000 investors losing over $1 billion of their retirement savings — illustrate the potential impact when financial services providers do not act in the best interests of Australian investors.
Earlier this year, Assistant Treasurer Daniel Mulino announced that unlicensed telemarketers who cold call and make unsolicited approaches to convince people to switch their super will be banned.
Lead generators going beyond referrals
Under the law, only a licensed financial adviser can give a consumer advice about their investments.
But ASIC's review found the 15 licensees used unlicensed lead generators to lure Australians into investment schemes.
The regulator said these lead generators took activities beyond simple referral, including lead qualification, appointment setting, fact-finding, product research and discussing investment performance or Statements of Advice (SOA) recommendations.
In one case, a lead generator had assisted with advice implementation.
ASIC also said some lead generators had used potentially misleading statements, fear-based claims, and non-like-for-like performance comparisons to persuade investors to switch their super.
It found involving lead generation in financial advice was likely to be "inconsistent with the obligations that apply to financial advisers" and their authorising licensees.
This included the obligation to act in the best interests of the clients and to only provide personal advice if appropriately authorised.
Licensees had inadequate controls
ASIC said some licensees were failing to supervise or understand what was happening within their networks.
Five of them did not have controls or standards in place that prohibited, or were likely to identify, high-risk superannuation switching by their authorised representatives.
A further four licensees were operating businesses that had some features of "high-risk superannuation switching", the review said.
ASIC commissioner Alan Kirkland said lead generators use "slick sales tactics to convince people to switch their super" and that this "can expose Australians to serious financial harm".
"Our message to advice licensees is clear: we will continue to take enforcement action under current laws where we find evidence of serious consumer harm."
Super Consumers Australia chief executive Xavier O'Halloran said ASIC's findings exposed "the greed driving high-risk super switching schemes".
"Good advisers don't need to cold call people to get clients," he said.
