In a submission to the parliamentary joint committee on corporations and financial services, the Australian Securities and Investments Commission (ASIC) was quick to point out that it is among the “most active law enforcement agencies in the country”, adding that it has recorded a 20 per cent lift in civil enforcement proceedings over the last five years.
According to the regulator, depending on some upcoming decisions, it will likely see “more civil penalties imposed in 2025 than ever before”.
While the submission to the PJC inquiry listed 10 proceedings and 18 defendants in relation to the Shield and First Guardian scandal, Tuesday morning’s action against Diversa has seen these numbers grow to 11 and 19, respectively.
“Further action is increasingly likely as we continue our investigations,” ASIC said in its submission.
“Our investigations into these high-risk super investment matters are complex. They include numerous lines of inquiry and a large number of entities and individuals; from lead generators to financial advisers, advice licensees, superannuation trustees, the research house, auditors and the operators of the managed investment schemes.”
Among super trustees, so far only Netwealth has not been sued, though Equity Trustees could potentially face further proceedings for its involvement with First Guardian, as the ASIC has so far only sued it over alleged failures relating to Shield.
The regulator also used the submission to reiterate its push for law reform in the space, noting that “while choice and risk are inherent features of superannuation and investment in Australia, we have observed there are areas of weakness in the system where the Committee may wish to consider potential reforms”.
These areas include lead generators and associated financial advisers, super switching practices, duties of superannuation trustees, and regulation of managed investment schemes.
Speaking at the National Press Club in November, for instance, ASIC chair Joe Longo said there needs to be more “friction” in the process of members switching their super.
“The superannuation-switching catastrophe that’s been unfolding with First Guardian and Master Shield and related funds, it all started with ordinary Australians, in many cases, moving, in my words, their super from a relatively safe, conventional environment into a high-risk environment,” the chair said.
“And there’s plenty of blame to go around for what went wrong there. And one of the things we’re suggesting is that we need to slow people down a bit.
“And that essentially means, if you go and buy a house or a car or a major financial investment, I mean, most of us put some time into that. We don’t do it on the same day. And unfortunately, because of the industrialisation of the approach to this misconduct, a lot of Australians were talked into moving their super on the same day or the next day. It’s pretty bad.”
ASIC has also previously highlighted that there needs to be tighter regulation on the broader managed investment scheme regime, however as things stand it has little leeway in granting approval.
“We must register a scheme within 14 days of lodgement unless it appears that the application, scheme documents or proposed responsible entity and compliance plan audit arrangements do not meet the relevant statutory requirements,” the regulator said.
It added: “The Australian managed investment scheme regime is relatively open and liberal by international standards. Australian regulations mandate that an appropriately licensed entity operates the scheme, and that adequate disclosures of the nature, benefits and risks of the scheme are made to enable their offer to retail investors.”
