Speaking at the Australian Financial Complaints Authority member forum on Wednesday, Locke said the failure of Shield and First Guardian is “devastating for people who are impacted”, however there are limitations on what AFCA can consider.
“I think it is probably the largest collapse that we’ve seen in recent years. As I said, the impact for thousands of people and their families is really quite profound, and so obviously, what we’ve seen is a number of actions taken by the regulator,” he said.
“We saw an agreement reached with Macquarie Bank for reimbursement of the consumers whose funds had been invested in one of the schemes as a result of it being on the Macquarie platform, but that’s only a portion of people, as many people that won’t actually help.
“We welcome any way in which we people are able to get their hard earned money back, but that’s only part of it.”
The complex nature of the system that funnelled Australian investors into Shield and First Guardian means that there is a range of parties involved in potential misconduct.
“We’ve got the funds themselves, we’ve got the responsible entities for the funds, which have gone insolvent. We have the superannuation platforms. We also have financial advisers in these cases as well,” Locke said.
“It’s very complex for people to actually understand even who the players are. Many people say they didn’t even understand that funds were being invested in this way, and we’re not dealing with, on the whole, sophisticated, professional people; we’re dealing with ordinary Australians who have been duped in this way and conned out of money.”
The complaints authority’s role, he explained, is to provide “clear, accessible, understandable pathways” for those impacted to have their complaints considered.
“There are some parties who we’re not able to consider complaints about either because they’ve gone insolvent or because of the limitations in our rules. So really, what we’re trying to do is to make things as understandable and clear as possible,” Locke said.
He added: “Insofar as there is a solution or there is an outcome that we can assist with, we will obviously do our damnedest to assist with that. But as I said, it’s a patchwork of a whole range of different players. Our jurisdiction can cover some situations, but not others.”
According to Locke, there have been “hundreds and hundreds of complaints” made to AFCA, however the “steady stream” the authority has seen so far is far from the end of the matter.
“There’s many more people who haven’t approached AFCA yet,” he said.
“I think what everybody wants is for these people to get their money back and for lessons to be learned from this whole very, very unhappy episode as to how greater protections can be put in place to protect people from such a situation occurring again.
“I think that’s really what our shared interest is. In terms of AFCA, we have a role, and clearly, where there are parties that we’re able to consider complaints about, we will do that, and we will do that in a professional way, and we’ll do that as quickly as we are able to do so.
“For some of those consumers, those matters, those determinations, will then go through to the Compensation Scheme of Last Resort, which with AFCA determinations can provide up to $150,000 in compensation. But that’s only one part of a whole picture here, and we’re only one player in this.”
