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ASIC to double down on unsuitable super advice
Among the most significant issues within its regulatory remit, ASIC has highlighted unsuitable superannuation advice resulting in adverse consumer outcomes.
In a recent statement outlining its key focus for 2025, the regulator said it has observed significant superannuation fund inflows into high-risk investments and payments to lead generation businesses, driven by high pressure sales tactics and social media.
“In recent work, ASIC has observed considerable volumes of superannuation fund inflows into high-risk investments, including property investments, via superannuation platforms and significant payments of superannuation monies to lead generation businesses,” the corporate regulator said.
“High pressure sales tactics and the use of social media algorithms to target receptive audiences, has enabled rapid growth in these types of business models.
“ASIC will continue to warn Australians about this conduct and will take enforcement action where we see misconduct exploiting superannuation savings.”
The corporate regulator also notified it has a current surveillance underway assessing the quality of financial advice to establish SMSFs.
Last year, ASIC sparked backlash after it asked advisers to do more to weed out unscrupulous actors and reduce consumer harm.
Namely, back in May the corporate regulator published a review which pointed to an erosion of member balances via advice fees, and the impacts of inappropriate super switching as a result of cold calling and high-pressure sales tactics.
At the time, the regulator noted that these led to generation and referral arrangements with a small subset of financial advisers, who typically recommend consumers switch into super products, incurring significant fees.
In May, ASIC commissioner Alan Kirkland said ASIC was prepared to take action to protect consumers and called on advice licensees and super trustees to step up their efforts.
“Financial advice licensees and super trustees have a critical role to play in preventing this conduct, including by reporting it to ASIC if and when they become aware of the conduct,” he said.
The timing of ASIC’s cautionary note was, however, considered suspect at the time because of the heightened scrutiny that surrounded the initial Delivering Better Financial Outcomes bill and the subsequent Senate inquiry.
In November, ASIC again placed “misconduct exploiting superannuation savings” right at the top of its list of enforcement priorities for 2025, with Kirkland noting that work on “models of financial advice that result in erosion of super” is a strategic priority.
Speaking at a FINSIA event that same month, Kirkland said “challenging economic environments always create opportunities for people selling snake oil”.
“The worst behaviour that we see is practices that start with telemarketing or clickbait ads on social media that encourage people to get involved in a review of their superannuation,” he said.
“They’re often in a well-performing, prudentially regulated fund, and they’re told it’s terrible and they should tip their money either into a platform product or into SMSF, with most of their super then ending up being invested in, say, a high-risk property scheme.
“So, we’ve got some significant action underway against those types of practices, but they’re obviously an enormous concern, because it’s people’s super that’s at stake, and in the worst cases, if it’s invested in some sort of cryptocurrency investment, it often just disappears overnight.”
AUTHOR
Maja Garaca Djurdjevic
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