Prime Highlights
Up to 6,000 Australians might lose up to $446 million in potential losses due to the collapse of the First Guardian Master Fund.
The fund is currently in the regulators’ spotlight with the liquidators indicating that it might take more than a year for recovery to happen.
Key Facts
Investor superannuation accounts were frozen mid-2024 and thousands were left unable to access.
The money was reported to have been diverted into speculative investments, high-end consumer goods, and related parties.
Key Background
The unexpected failure of the First Guardian Master Fund has put between $446 million of super funds in jeopardy, threatening the savings of almost 6,000 Australian investors. The investors were enticed to roll over their superannuation savings into retail super funds—many with little knowledge—before being channelled into First Guardian. Tough sales strategies were employed by financial planners, with some investors not knowing their funds were being invested into a non-APRA regulated investment scheme.
Early examinations show that the fund had as much as $642 million, with just $197 million being taken out prior to collapse. Liquidators have cited serious concerns in following the remaining funds, indicating it was spent on risky property investments, exported overseas, or used to buy luxury property assets such as luxury vehicles and property. The authorities are concerned that the funds will not be recovered.
The Australian Securities and Investments Commission (ASIC) has retaliated by freezing passports and assets of the main players behind the scheme. The financial advisory firms said to be involved in misleading clients and evading consent conditions are awaiting court action. Super belonging to some clients was rolled out in “negative consent” arrangements—investments were changed unless the customers objected, usually without affirmative awareness.
The event has also sparked grave questions regarding the supervisory action of retail super funds and the platforms offering high-risk schemes of investment. ASIC is now contemplating if it should take enforcement action against big trustees and super platforms which offered high-risk schemes easily to people. Affected Australians are now apprehensive as liquidation procedures took more than 12 months, and recovery of the lost money is extremely unlikely.
