Adviser bans on the way as ASIC ramps up Shield and First Guardian enforcement

ASIC hit the ground running to kick off the new financial year, having already announced the cancellation of two advice firms’ Australian Financial Services Licenses (AFSL) for failing to pay industry funding levies, a Federal Court win that saw a former wealth firm director convicted of contempt of court, and travel bans against Falcon Capital directors.

The latter is part of the corporate regulator’s ongoing investigation into the collapse of the First Guardian Master Fund (of which Falcon is the responsible entity) and the Keystone Asset Management’s Shield Master Fund.

While First Guardian and Shield were not under the same management, there are a number of similarities in the conduct that drove investment into the funds – as well as the involvement of a handful of financial advice firms.

The long and short of it, as far as the investigations have led so far, is that superannuation comparison services utilised a raft of high-pressure sales tactics to funnel unsuspecting Australians into these firms, which subsequently advised the clients to roll their super into a self-managed super fund (SMSF) or super platform and invest the vast majority of their assets into Shield or First Guardian.

Despite ASIC taking significant action in these cases – everything from asset freezes and travel bans to AFSL cancellations and even a raid here and there – so far it hasn’t banned a single financial adviser.

However, according to ASIC deputy chair Sarah Court, that is set to change and announcements could be on the way before the end of the week.

“We’re also looking at adviser bannings, and those are currently underway, and you’ll be seeing more about that in the next day or two,” Court told a media briefing on Wednesday.

While she noted that the regulator is limited in terms of the information it can disclose given the ongoing investigations, the “whole area of exploitation” remains an important focus.

“Our primary aim here in the enforcement work that we’re taking is, at least at the outset, to preserve any assets that remain in the schemes so that they can be realised to the extent that they are available for the benefit of the consumers, while we continue our investigative work,” Court said.

“We’ve really invested heavily in these matters, and we have diverted a number of resources from other important projects.”

Importantly, she noted, the investigations are looking at the entire chain, including conduct of the lead generators, the financial advisers, the superannuation platforms, “who we think have a real role here”, and the research houses that “listed these funds as investable”.

‘Industrial scale’

Earlier this year, ASIC chair Joe Longo described the investigations related to Shield in particular as “among the most complex that ASIC is undertaking at the moment”.

At the same time, Court described the models involved in funnelling money into the funds as being on an “industrial scale”, which is a term the regulator has continued to utilise over the ensuing months.

On Wednesday, she said it is not a phrase she uses “lightly”, but the methods used fit the bill.

“What we’re seeing here is consumers or investors that are being contacted in some way or other by what we call, broadly, lead generators,” Court said.

“They’re not financial advisers, per se, but they are effectively operating like call centres with a script and with the job of enticing these investors into the web.”

She added: “There’s the lead generator, then you’ve got the adviser, then you’ve got the fund, and all of the challenges and what we think is misconduct associated with the fund that is sitting on a trustee platform, like a Macquarie or Equity Trustees.

“All of those people are taking money, getting commission, payments, incentive payments or misconduct.”

As ASIC looks into the entire chain, Court said the regulator is trying to understand whether or not it can hold the lead generators to account.

However, ultimately, she said, “financial advisers are the one that are the ones that are providing the advice to people to say you should roll your funds out into something like a Shield or a First Guardian”.

Court was unable to provide specific numbers on how large this “industrial scale” actually is, she noted ASIC currently has investigations into “seven or eight of these entities”.

“Every single one of those investigations has multiple potential targets sitting behind it,” she added.

Advice firms involved

Much of the attention has, for good reason, been focused on the involvement of Ferras Merhi and the advice firm he controls – Venture Egg Financial Services – which were both authorised representatives of InterPrac Financial Planning.

While Merhi has had his assets frozen – and been ordered to hand in his passport – the only thing technically stopping him from being able to provide financial advice is InterPrac cutting ties.

He could have swapped over to the AFSL he controls – Financial Services Group Australia (FSGA) – but ASIC cancelled its licence in mid-June.

However, Venture Egg isn’t the only advice firm on the regulator’s radar.

Reilly Financial, controlled by Rhys Reilly, is also listed on the regulator’s Shield Master Fund enforcement page.

Interestingly, historical ABN details show that the holder of Venture Egg was previously called Ferras Merhi Pty Ltd & Rhys Reilly Pty Ltd.

While Reilly Financial is still listed as an operational business, Reilly himself appears to now be operating a different firm, creatively named The Life Insurance Company.

Also authorised through InterPrac as of 21 May 2025, coincidentally, the firm is situated in the same building as Reilly Financial.

The aforementioned FSGA licensed four firms that ASIC highlighted: Rebellis Financial Services, 5 Point Australia, AS Financial Planning, and STC Financial.

All four firms entered into liquidation on 3 December 2024.

The other licensees named are the currently in liquidation Next Generation Advice, which has the distinction of also being connected to the United Global Capital (UGC) collapse, and MWL Financial Services.

While MWL is, in many ways, the last entity standing, it has some close ties with Keystone.

MWL director and manager of its accounting business, Louie Kortesis, also served as a director of Keystone from 29 December 2023 to 14 November 2024.

According to The Australian, around $4.9 million found its way from Shield through the Chiodo Corporation to 24Calibre, an entity controlled by Kortesis, “apparently for celebrity appearance fees, agent fees, travel costs and operating costs”.

Warning for consumers

Short-term takeaway for ASIC, Court said, is that Australians need to be alert to the dangers of high-pressure sales tactics, clickbait advertising and promises of unrealistic returns that are enticing consumers to invest their retirement savings into complex and risky schemes.

“When it comes to sales calls about super switching, there are some big red flags people should be alert to – being asked to make a quick decision is one of the most obvious.  Remember, a good deal won’t vanish overnight,” Court said.

“The initial salespeople can be very persuasive, often the underlying schemes are complex or not made clear to the consumer, and it may be very difficult for even experienced investors to spot problems. Once you start on the path it can be hard to get off. 

“These calls don’t have the hallmarks of a typical scam. The caller will seemingly have your best interests at heart, and they say they want to help you find a better super product or locate lost super for free.”

She added that these referral firms use the referrals to financial advisers as a way of creating a “sense of comfort and legitimacy”.

“Consumers should always ask questions about salespeople’s connections to funds, particularly in circumstances where a particular fund appears in the pitch, as there may be a commission arrangement,” Court said.

“If you are unsure or are feeling pressured, just hang up.”