Netwealth has struck a deal with the Australian Securities and Investments Commission (ASIC) to compensate more than 1,000 Australians who invested their super in First Guardian.
It has also admitted to contraventions of the Corporations Act
ASIC said it has commenced proceedings in the Federal Court against Netwealth Superannuation Services Pty Ltd (NSS) and Netwealth Investments Limited (NIL), as trustees of the Netwealth Superannuation Master Fund (NSMF).
“NSS and NIL have admitted they failed to obtain and therefore did not assess sufficient information about the First Guardian Master Fund, or make sufficient independent enquiries, to understand or evaluate the investment risk in the First Guardian Diversified Class and Growth Class prior to or while offering them as investment options to NSMF members,” ASIC said.
The regulator will seek orders that NSS and NIL failed to do all things necessary to ensure that the financial services covered by their financial services licences were provided efficiently, honestly and fairly.
ASIC has also accepted a court-enforceable undertaking from NSS and NIL to ensure members are compensated 100 per cent of the amounts they invested in First Guardian less any amounts withdrawn. The compensation payments will be made by 30 January 2026.
Deputy chair Sarah Court said: “This is a welcome outcome for many Australians and stems the significant losses that threatened their retirement savings.
“More than 1,000 members who invested through Netwealth’s superannuation platform were facing huge uncertainty when First Guardian collapsed.
“ASIC’s investigation will ensure Netwealth restores these members to the position they were in before they saw their savings eroded.
“This is the fourth action we’ve taken against a superannuation trustee in relation to our ongoing First Guardian and Shield investigations, and follows ASIC securing the payment of $321 million to Shield investors by Macquarie.”
NSS and NIL have admitted the allegations in the proceeding, and it is now up to the Court to determine whether the declarations are appropriate.
ASIC said it will not seek a pecuniary penalty due to the “exceptional circumstances of this matter”.
This included the strong public interest in obtaining a timely court-based outcome, which will “encourage other superannuation trustees to comply with their legal obligations in the context of choice platforms”.
It also noted the interests of providing affected members who invested into First Guardian through a regulated superannuation fund with certainty in a timely manner, and the “level of cooperation demonstrated by NSS and NIL in agreeing to compensate members 100 per cent of the amounts invested in First Guardian less any amounts withdrawn”.
“The action we’ve taken in the last few months puts super trustees well on notice: they are gatekeepers for their members’ retirement savings and ASIC expects them to take active steps to monitor the funds they make available on their choice platforms,” Court said.
“ASIC now has 12 cases underway against 20 defendants and is continuing to investigate misconduct relating to Shield and First Guardian to hold those involved to account.”
The Australian Prudential Regulation Authority (APRA) has also accepted a court enforceable undertaking from Netwealth to “address material weaknesses in its investment governance framework and practices”.
“This action follows APRA’s recent thematic review of the investment governance, strategic planning and member outcomes practices of superannuation trustees that offer platforms, which identified deficiencies in Netwealth’s onboarding due diligence and monitoring of investment options, as well as management of outsourced investment services and related conflicts of interest,” it said.
The prudential regulator expressed concerns regarding Netwealth’s oversight, knowledge and due diligence of new investment options offered to members on its platform.
Deputy chair Margaret Cole said: “Robust investment governance, including in relation to onboarding and monitoring of platform investment options, is critical to safeguard the interests of members. APRA will maintain a strong focus on investment governance, particularly in the platform segment, throughout 2026.”
Netwealth has around 115,000 member accounts and over $40 billion in funds under management.
In September, ASIC announced that Macquarie Investment Management Limited (MIML) had committed to paying $321 million to cover the losses of thousands of Australians that invested in Shield through its platform.
ASIC has commenced proceedings in the Federal Court against MIML following admissions that it did not act “efficiently, honestly and fairly by failing to place Shield on a watchlist for heightened monitoring”.
The regulator also accepted a court-enforceable undertaking from Macquarie to ensure it pays members 100 per cent of the amounts they invested in Shield less any amounts withdrawn.
“This is an important outcome that stems the significant losses that threatened thousands of members’ retirement savings after they used Macquarie’s platform to invest their super in Shield,” ASIC deputy chair Sarah Court said at the time.
“Many members thought their funds were safe when they used Macquarie’s super platform to invest in Shield, which had no track record.
“ASIC’s investigation will see Macquarie return these members to the position they were in before their retirement savings were eroded.”
In late August, ASIC took action against Equity Trustees, alleging that it failed in its due diligence requirements over the inclusion of the Shield Master Fund on its platform.
“Instead of acting as an effective gatekeeper for its members’ retirement savings, ASIC alleges Equity Trustees allowed thousands of members to invest in Shield which had no track record. Those members ultimately saw their super balances eroded,” Court said at the time.
In October, the corporate regulator sought to expand its proceedings against Equity Trustees to seek compensation from the super fund trustee following Macquarie agreeing to pay members $321 million over its failings related to Shield.
Earlier this month, ASIC also commenced civil penalty proceedings in the Federal Court against Diversa Trustees Limited, alleging failures concerning the First Guardian Master Fund.
According to ASIC, around $300 million was invested into First Guardian from 2020 to 2024 through superannuation funds for which Diversa was trustee.
In the filing, ASIC alleged that Diversa had failed to conduct “adequate due diligence before allowing its members to invest and failed to conduct adequate ongoing monitoring”.
The regulator also alleged that Diversa failed to enforce a 50 per cent holding limit that it had imposed for First Guardian and failed to have systems and processes in place to ensure that there was compliance with that holding limit.
It’s clear as day that platform trustees such as Macquarie, Netwealth, Equity Trustees haven’t been doing nearly enough due diligence to satisfy the law when it comes to the First Guardian and Shield investment options. Members/Clients and Advisers should be able to rely on these large gatekeepers that are essential for the financial plumbing of Australia.
However, advisers should also be able to rely on major research houses like SQM Research who rated these products as Favourable no corporate governance concerns.
ASIC should have caught First Guardian way earlier as they were submitting fraudulent audit reports for years.
The CSLR needs to be funded by all aspects of the financial eco-system.
Well done to Netwealth for stepping up here. Agreeing to compensate members in full is the right move rather than dragging this out in court for years or trying to lean on Part 23 and stick taxpayers with the bill. Members get certainty, they get their money back quickly, and Netwealth takes responsibility for its due diligence failures. That’s how it should work.
They also pick up considerable goodwill with advisers and their clients in the process. In a competitive platform market, being seen to do the right thing when it matters counts for a lot.
Macquarie established the precedent and now Netwealth is establishing the norm going forward. This level of consequence throughout the supply chain means companies now know their balance sheets are genuinely at risk. That should shift internal processes from ticking compliance boxes to actually assessing and managing risk. When due diligence failures can cost you $100 million or $300 million, you pay a lot more attention to what you’re putting on your platform. That’s exactly the behavioural change that the ecosystem needs.