Platform operators’ culpability for Shield and First Guardian-related member losses will soon be a matter of legal debate thanks to Diversa Trustees – and a new ASIC report may shed some light on why.
ASIC’s Safeguarding super report is based on research involving six platform trustees over the period from 1 June 2024 to 31 October 2025. Collectively, the regulator said, these trustees represent around $300 billion in member benefits and account for 72 per cent of the platform market (as measured by share of member funds).
The report noted that both ASIC and APRA have been concerned about platform oversight of advice fee deductions and investment activity (or lack thereof) since the issue was raised in a joint letter in 2019. It was again raised in 2021.
Despite this, the report said, “progress has been too slow.”
“We were particularly concerned that in feedback meetings with trustees, a small number of accountable senior executives did not know what advice fee caps and other controls were in place on their platforms,” the report explained.
“Trustees’ senior executive teams should have access to timely, accurate and targeted reporting on advisers and advice licensees. This includes oversight of advice fee deduction and switching behaviour, to satisfy themselves that they are complying with their Financial Accountability Regime obligations.”
Regarding advice fees, ASIC found that fee caps were still “too high and too flexible”; some flat-fee caps were as high as $30,000, while percentage-based caps ranged from 1.66 per cent to 10 per cent. For half of the trustees surveyed in the report, percentage-based caps had no dollar-based limit, meaning percentage-based fees could easily eclipse that $30,000 ceiling.
At the same time, only one of the six surveyed trustees had a minimum balance requirement above $20,000 for advice fee deductions.
While some trustees argued there were valid reasons for this – a member may have converted most of their super to the retirement phase, for example – ASIC urged them to “consider their low-balance protections in the context of their [target market determination],” particularly with respect to minimum balance requirements for specific products.
The lack of protections for fee deductions also extended to advice document checks. Over the relevant period, half of the trustees reported at least one month where no checks were conducted; one only conducted checks in four of the 17 months ASIC was assessing.
Further, nearly 10 per cent of the checks conducted by the six trustees resulted in adverse findings, and ASIC found that “trustees with the highest rates of adverse findings performed the least checks.”
Given that “egregious cases of misconduct” like Shield and First Guardian are typically characterised by unusual patterns in advice fee deductions and investment flows, ASIC had expected platforms to have suitable monitoring in place to detect this kind of activity. This was rarely the case, though.
Only one surveyed trustee considered advice fee charges alongside investment flows. Another only scrutinised advice fees in the context of anti-money laundering obligations, and two trustees didn’t monitor any new business activity at all.
“Additionally, while four of the six trustees applied holding limits for investment options on their platforms, only two trustees reported monitoring their holding limits,” the report said.
“Holding limits provide little protection to members, unless they are monitored and enforced effectively. These gaps in monitoring were particularly concerning given the central role holding limits play in insulating members from concentrated exposure to high-risk investment options.”
Commenting on the report’s findings, ASIC commissioner Simone Constant said: “It’s clear some trustees are not doing enough to protect their members, despite repeated warnings from ASIC and APRA about the dangers of poor oversight. Nor have they learned lessons from the collapses of the Shield Master Fund and First Guardian Master Fund, which cost more than 11,000 Australians around $1 billion in retirement savings.”
“Many of the clear gaps in oversight are deeply concerning and difficult to justify. Trustees should not expose their members’ retirement savings to unacceptable risks in the pursuit of volume growth,” Constant added.
ASIC appears at senate hearings and dodges questions all the time. They might as well have a button that says “I’ll take that on notice” so they can just mash and save their breath. This is just pathetic public shaming from a regulator that is out of control, whose failings lay at their own feet, where accountability is unheard of and corruption is a near certainty.
I’d like to know why 12 months prior to the collapse of First Guardian, I contacted ASIC and they laughed at me?
Why would ASIC laugh at an Adviser with 20 plus years of looking at Financial Statements and providing Advice begging them to check something out. And then they have the hide to question advisers about the lack of reporting of this issue., to an Adversarial regulator that wants to destroy them.
This is just smoke and mirrors stuff to deflect from there own failure to act.
So why don’t they name them and shame them rather than cloud their identity with generalizations on 6 Trustees!!
I get sick of paying levies to Organizations that hide behind curtains.