Shield and First Guardian is a $1.1bn ouroboros of blame

In the midst of the slow-motion car crash that is the Shield and First Guardian collapses, the unfortunately common natural instinct of people to shift the blame to everyone else and avoid responsibility for their own actions has reared its head.

Whether or not any of the people involved truly believe they are blameless – or whether anyone actually is wholly blameless – is impossible to tell.

For most sitting on the outside looking in, it’s hard to rationalise how any link in the chain could sincerely believe they met the standard that was expected of them under their various professional obligations.

However, we largely judge ourselves on our intentions and others on their actions, and an individual convincing themselves that they can skirt the rules and enrich themselves without hurting anyone is far more common than setting out with a desire to cause harm.

If ASIC chair Joe Longo’s rough range of impacted clients across the full range of funds it is currently investigating is anything to go by, that harm is set to hit as many as 30,000 Australians.

The only party that has taken ownership of their role in failing consumers is Macquarie, with the financial giant's super fund trustee reaching a deal with ASIC to cover the $321 million of investments in Shield from around 3,000 members.

The fund managers are, rightfully, the first port of call for everyone else tied up in this mess looking to shift blame.

It’s far from where the finger pointing ends.

Indeed, you would be hard pressed to find someone that hasn’t been thrown under the bus, from the regulator to the auditors and everyone in between.

Last week, ASIC deputy chair Sarah Court summed it up well in a parliamentary committee hearing.

“One of the challenges with these matters is that in a sense, everyone is pointing fingers at everyone else,” Court said.

“For example, the financial advisers are saying to us, ‘Well look, you can’t hold us accountable for this ASIC, because the ratings house had rated these funds, or at least the Shield Master Fund, as of investment grade.’ Super fund trustees are telling us the same thing, saying, ‘Well we relied on the ratings houses’ or ‘We relied on the fact that these members had financial advice.’”

In that same hearing, Labor senator Deborah O’Neill lumped a lot of blame on advisers, saying “there’s enough there who are looking at a very lucrative business model by ripping off their fellow Australians”.

Somehow this resulted in ASIC defending advisers, which many within the profession may feel is a rare occurrence.

The next step was – as is their wont – the opposition piling some blame on the government for good measure.

“Labor can’t run forever. Smearing advisers won’t fix broken laws. We need targeted action against fraudsters, their business models and the loopholes they exploit,” said shadow financial services minister Pat Conaghan.

Sequoia boss Garry Crole has simultaneously denied advisers licensed through InterPrac engaged in poor practices and ceased their authorisations, while also arguing trustees were deceived but should bear the brunt of the cost.

Former Venture Egg boss Ferras Merhi even dragged Google and Facebook into the debacle, claiming most of the $19 million his lead generation firm was paid is sitting in the tech giants’ coffers.

Zooming out, the sad reality is that had any of the parties involved either done their jobs properly or realised something was off, a lot of pain could have been avoided.

Instead, conduct ranged from outright criminal to complicit, negligent, lazy, or gullible.

Apply the labels as you see fit.

When all is said and done, no one will come out of this looking good. It won’t matter that the parties involved are a tiny part of the overall system, the damage will hit everyone.

The metaphor du jour has largely been links in a chain, but with the circle of finger pointing it is closer to an ouroboros of poor conduct devouring itself.

Hopefully it doesn’t take everyone else down with it.