The biggest scandal in superannuation | The Business | ABC News

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Subscribe: https://ab.co/3yqPOZ5 Read more here: The collapse of First Guardian and Shield schemes left thousands of Australians distraught and exposed deep flaws in how Australia's $4.3 trillion superannuation sector is regulated. The corporate regulator says it didn't miss any red flags and acted as soon as it could. ASIC blocked investment in Shield in February 2024 and froze the assets of First Guardian in February 2025. ASIC deputy chair Sarah Court says as soon as they became aware that there was something wrong with "the underlying fund itself, like the solvency of the fund or investors' monies in relation to that fund, then (they) acted very quickly to shut that down". ASIC's allegations — yet to be tested in court — include that hundreds of millions of dollars of investor funds were sent offshore and used by the companies' directors for pet projects, as well as paying for fast cars and mortgages on lavish homes. The regulator is investigating almost everyone involved, including the telemarketers who first contacted investors, often using hard-sell tactics to convince them to move their superannuation savings out of APRA-regulated super funds and into managed investment schemes that do not face the same level of scrutiny. The corporate watchdog is also investigating financial planners, who often had connections with the telemarketers and who convinced the investors to sign legal documents known as statements of advice (SOAs) that would lock them into moving their superannuation savings — in many cases hundreds of thousands of dollars — into less regulated schemes. Ferras Merhi - the Venture Egg chief executive and owner of Financial Services Group Australia is being investigated by ASIC. Mr Merhi told ABC News in a written statement: "Every allegation of unlawful conduct that ASIC has made, and any allegation it might yet make, will be strenuously defended in the court proceedings". ASIC has also gone after the licensees that were supposed to govern the financial planners giving the advice, cancelling the licences of MWL Financial Services, United Global Capital and Financial Services Group Australia. The other licensee involved, Interprac, is operated by ASX-listed Sequoia. It's the only licensee involved with Shield and First Guardian that as yet has not faced a ban. Its CEO, Garry Crole said they were not worried about being next on ASIC's hit list. Mr Crole says Interprac has since put in place a new governance committee that oversees its approved product list. Mr Crole previously wrote to investors caught up in the collapses, telling them they might be able to get "remediation" from super trustees. Both First Guardian and Shield were accessed through well-known superannuation platforms including Macquarie, Diversa, Netwealth and Equity Trustees. Both Macquarie and Netwealth have agreed to repay investors a combined total of about $421million. ASIC estimates that about 40 per cent of the money retail investors put into the collapsed funds will be repaid. The regulator is also taking legal action against the other super platforms. Also, the banking regulator APRA takes action against super fund HESTA for a seven week planned outage. It follows widespread reporting by this program about how the outage prevented some members accessing their money and ASIC reveals widespread systemic governance failures into the handling of death benefit payments. #ABCBusiness