ASIC is warning consumers to be wary after an ASIC review identified some cold calling operators using high-pressure sales tactics and online click-bait advertisements to lure consumers into receiving inappropriate superannuation switching advice.
These cold calling operators - which make unsolicited calls to consumers after obtaining their personal information from third-party data brokers or by using online click-bait - have lead generation and referral arrangements with a small subset of financial advisers, who typically recommend consumers switch into super products incurring significant fees.
ASIC Commissioner Alan Kirkland said the operators, which typically targeted Australians between 25 to 50 years of age, were putting people at risk of having their retirement savings eroded.
'Some of these cold calling operators are pressuring consumers in critical retirement-saving years to move their savings when it is not in their best interests, putting them at risk of having less super as a result of inappropriate investments, fees and charges,' said Mr Kirkland.
'The small subset of financial advisers benefitting from this conduct threaten to undermine the reputation of the rest of the industry.'
Specifically, ASIC has observed considerable volumes of superannuation savings flowing into high-risk property managed investment schemes - either via platform superannuation products offered by APRA-regulated funds or a self-managed superannuation fund (SMSF) - and associated payments made to cold calling businesses.
Commissioner Kirkland said ASIC was prepared to take action to protect consumers and called on financial advice licensees and super trustees to do more to weed out unscrupulous actors and reduce consumer harm.
'Deterring cold calling for superannuation switching models is an ASIC priority, and we will continue to take action, including enforcement action, to protect consumers from high pressure, cold calling practices that induce inappropriate superannuation-switching,' he said.
'Financial advice licensees and super trustees have a critical role to play in preventing this conduct, including by reporting it to ASIC if and when they become aware of the conduct,' Mr Kirkland said.
Financial advice licensees should ensure they have in place adequate monitoring and supervision arrangements to detect concerning conduct and to make sure their advisers are acting in the best interests of their clients.
Likewise, ASIC expects trustees to be mindful of the potential for superannuation balance erosion and ensure they have in place robust systems and processes to oversee charges of financial advice fees from member accounts.
ASIC recently reviewed how trustees oversee advice fee charges and will release a report with key insights.
ASIC has also launched a consumer awareness campaign, encouraging consumers to 'just hang up' when contacted by cold calling operators, and to 'just scroll past' social media click-bait advertisements.
Background
ASIC began taking action against this type of business model in 2020 with the revocation of the Australian Financial Services (AFS) licence of Smart Solutions Pty Ltd and the banning of the adviser and responsible manager. Since 2020, ASIC has finalised other matters in relation to this type of conduct, including numerous adviser bannings, financial advice licensee cancellations, supervision orders and criminal convictions for hawking - the use of unsolicited marketing and sales of financial products.
