Australians lost $1bn through collapsed investment funds. What happened and how can workers keep their super safe?

The Guardian

3 days ago

Thousands of Australians recently lost more than $1bn in retirement savings after the collapse of funds linked to their superannuation platforms, sparking warnings from the corporate regulator about risky investment schemes.
While only a small share of the population has been affected, some investors have seen their entire super balances wiped.
Here is how the collapses happened, and what Australian workers can do to avoid a similar situation.
Over the past year or so, more than 12,000 Australians have been exposed to three major collapsed or frozen investment schemes: First Guardian, Shield Master Fund and Australian Fiduciaries. The failures have so far led to collective losses of up to $1.2bn.
The Australian Securities and Investments Commission (Asic) blocked investment in Shield in February 2024 and froze the assets of First Guardian in February 2025 after its managers blocked most investors from accessing their funds in May the previous year.
The corporate regulator is also investigating concerns about Australian Fiduciaries including alleged inadequate management of conflicts of interest.
First Guardian, which held $505m for about 6,000 investors, described its investments as focused on shares, property, private equity and fixed income, according to federal court-appointed liquidators.
The liquidators found the company had put nearly $70m into businesses connected to its directors while more than $240m was invested offshore. One director also allegedly bought a Lamborghini with nearly $550,000 of company money.
Investors have been warned they will probably only get a portion of an outstanding $446m back, and not until 2027 at the earliest, after liquidators said they expected to conclude directors breached their duties, the value of investments may have been overstated and funds may not have been properly recorded.
The fund's May 2024 balance sheet indicated it had grown that to $525m but more than half of that was in question and investors were not likely to recover their entire investment, receivers for Shield reported in November 2024.
They found managers had overstated the value of investments in a real estate fund and nearly $7m had been spent on a former director's personal expenses. Some investments would not be recovered for more than two years, the receivers said in December.
In these cases, investors switched to superannuation products that would let them invest in First Guardian or in Shield with financial advisers' help, after being cold-called by salespeople, Asic says.
The corporate regulator has put the spotlight on salespeople pressuring customers to invest in specific products. Red flags for consumers include cold calling and high-pressure sales tactics, or offers of prizes, free superannuation health checks, or free consolidation of lost super, according to Asic's deputy chair, Sarah Court.
'These calls don't have the hallmarks of a typical scam. The caller will seemingly have your best interests at heart, and they say they want to help you find a better super product or locate lost super for free,' she says.
'If you are unsure or are feeling pressured, just hang up.'
Customers and financial advisers reached the products through superannuation platforms, including one operated by an arm of Macquarie Group, that temporarily chose to offer one or both products, Asic says.
Super funds are highly regulated and they are discouraged from investing in schemes that are risky or opaque, according to Xavier O'Halloran, the chief executive of advocacy group Super Consumers Australia.
Nearly 15 million among the 18 million accounts in Australia are in MySuper products, default super funds that employers offer workers, which did not invest in the collapsed schemes, he says.
While all investment carries risk, MySuper products are diversified, and so not reliant on a single investment or asset class.
Some Australians invest in less scrutinised schemes, especially through self-managed super funds. Asic recently warned it had growing concerns that peoplewere being encouraged by salespeople and cold-callers to switch from safe investments into complex and risky schemes.
Phil Anderson, the general manager of policy, advocacy and standards at the Financial Advice Association Australia, encourages people to research their investments and check details with their financial advisers if they're worried they might be in an inappropriate investment.
'It is quite evident that there's failings in the system,' Anderson says.
'Don't be rushed into doing something. Challenge the adviser: Why is this the right thing for me? … What track record do these investment options have?'
Investors can also spread their superannuation between different investment options within or across funds to limit the chance of a single collapse knocking out their entire savings, Anderson says.
Customers can check what assets their super is invested in and how it is performing when superannuation funds release their annual statements for 2024-25 in coming months.
People who have been told to swap from a MySuper product can also ask their adviser if their prospective fund has been checked by the regulator, the Australian Prudential Regulatory Authority.
Asic has encouraged those who have lost money in a collapse to make a complaint about their adviser to the sector's independent ombudsman, the Australian Financial Complaints Authority.
If a customer has lost money but their advice firm has gone into liquidation or insolvency, they may be able to appeal to the sector's compensation scheme of last resort.
However, not all of the losses may be recompensed. Last resort compensation payouts are capped at $150,000 per individual and would only cover any clients who accessed the products under the guidance of an adviser, meaning any customer who made the decision without advice would not be eligible.
The compensator is expecting claims against advisers linked to the funds but has received no claims for Shield and only one for First Guardian, according to the scheme's chief executive, David Berry.
That has made it impossible to determine how many investors will be eligible, how much they might be paid or when they might be compensated, he said.
This shortfall has led to calls for increased regulation of the products responsible for the losses, known as managed investment schemes, but also for reform of the compensation scheme of last resort so it covers those who invested without advice.
Guardian Australia attempted to reach representatives of the funds Shield, First Guardian and Australian Fiduciaries, including through the firms' liquidators or administrators where applicable.
Financial advice firm Interprac and superannuation platform trustees Macquarie, Equity Trustees, Diversa and Netwealth each declined to comment.