In late February, InterPrac filed a lawsuit in Federal Court against the Australian Financial Complaints Authority (AFCA), with parent company Sequoia’s chief executive Garry Crole telling ifa it is “with respect to fairness and [AFCA] breaching their own rules”.
In its latest development, InterPrac has named Melinda Kee – a former client of the firm – as second defendant in its lawsuit against the complaints authority.
According to the concise statement provided to Super Review’s sister-brand, ifa, Kee was advised by Rhys Reilly, an InterPrac authorised representative (AR) to rollover her superannuation from a Macquarie Investment Management account into a new Australian Practical Super account held within Diversa Trustee Limited.
It stated that she was then advised to invest her super primarily into the First Guardian Diversified Strategies investment option within the fund.
After First Guardian collapsed, Kee then lodged a complaint with AFCA in July 2025 and on 10 April AFCA ruled in her favour.
It determined that the advice provided to Kee was inappropriate and contrary to her best interests because:
- It was not based on adequate understanding of the complainant’s circumstances;
- It provided insufficient benefit over the complainant’s existing superannuation;
- It lacked sufficient diversification and was risky and;
- It lacked sufficient detail on the investment and its suitability for the complainant.
As a result, InterPrac was ordered to pay her $368,093.11 plus interest within 30 days of her acceptance which occurred on 10 April 2026.
This is less than the initial amount Kee was supposed to be awarded but she accepted the $50,000 loss out of concern the process would be further delayed as Sequoia had just announced its intention to sell InterPrac to Conquest for $50,000 just a few weeks prior – a deal that has since fallen through after ASIC started to investigate the matter.
Instead of being paid her due, Kee was named as a defendant in InterPrac’s case against AFCA just three days before the 10 May deadline.
Speaking with ifa, Kee said: “Financially harmed victims are being traumatised all over again.”
“Not only is InterPrac refusing to pay compensation awarded through AFCA, but they are now dragging ordinary Australians like myself into Federal Court disputes simply because I’ve exercised my rights under the system, a system that was set up to provide a free-from legal proceedings and costs.”
“We have already lost trust in the superannuation system after seeing our retirement savings stolen. Now we are discovering that even the consumer protection system we were told existed to help us can be challenged, delayed and weaponised against us.
“In my view, InterPrac is avoiding its responsibilities as an Australian Financial Services Licence holder by refusing to honour AFCA determinations and pursuing every possible delay mechanism available within the system, while financially harmed victims continue living with enormous uncertainty, stress and emotional distress. One can only ask, where is their moral compass?”
InterPrac’s justification
As laid out in its statement, InterPrac has argued that the Kee’s AFCA determination was “unreasonable” and contains multiple errors and unsupported conclusions.
Namely, it suggested that the advice provided did meet Kee’s desire to reduce her fees (one of her primary goals of the limited advice provided), and that it was an appropriately diversified investment solution and wasn’t inappropriately risky.
InterPrac also argued that her capital loss is not yet crystallised because the Falcon Capital liquidator has advised it has already recovered some of the assets with the majority still being investigated and thus “it is unreasonable for AFCA to conclude that Ms Kee has suffered a loss”.
At the same time, the firm tried to shift blame to SQM Research from which Reilly had allegedly relied on as his basis for advising Kee toward the First Guardian fund.
SQM is also facing legal action from ASIC in relation to the Shield and First Guardian funds.
In proceeding down this path, InterPrac has sought, among several things, a “declaration that the determination is invalid and be set aside”, according to the Notice of Filing and Hearing – Originating Process document for the case provided to ifa.
The firm further asked for an order restraining Kee from “taking steps to enforce or give effect to the determination pending the final determination of these proceedings”, leaving her at a stalemate.
Next steps
Given the proceedings are still in the early stages, Kee’s lawyer, Callun Blurton of Financial Dispute Legal, told ifa they are still in the process of reviewing the court material and considering what is in her best interest, though she has expressed the desire to take an active role in the proceedings.
However, Blurton warned that the outcome of this case could have ramifications for other InterPrac complainants.
“A significant concern is that InterPrac’s decision to bring this proceeding may have consequences well beyond Melinda’s complaint. If InterPrac is seeking to challenge AFCA’s approach to complaints involving Shield and First Guardian, the outcome may have serious implications for many other investors who received advice from InterPrac authorised representatives and are now seeking redress.”
Based on the most recent data from AFCA, there are currently [950] complaints against InterPrac.
“InterPrac’s decision to challenge AFCA determinations involving Shield and First Guardian is troubling. The broader implication of the Court cases is that InterPrac appears to be continuing to defend advice provided in relation to these products, despite the serious losses suffered by investors,” Blurton said.
“Like Melinda, many of our clients received advice from InterPrac authorised representatives. Based on the matters we have reviewed, there are serious concerns about the quality of that advice. In some cases, the advice appears to have been provided or implemented in circumstances where there was little or no meaningful engagement with the client.
“InterPrac is entitled to pursue whatever legal rights it says it has, but its decision to take this step should be criticised as the advice surrounding Shield and First Guardian involved a cookie-cutter advice process which has caused significant harm to many investors. This Court case now adds to the uncertainty and impact caused.”
Kee is now calling on the Australian Prudential Regulation Authority (APRA) to invoke part 23 of the Superannuation Industry (Supervision) Act (Sis Act) which is a government safety net that allows APRA-regulated super funds that have suffered an eligible loss due to theft or fraudulent conduct to apply for financial assistance from the government.
“If this situation does not justify its consideration, many victims will ask what the provision is actually there for. Joe Longo and Sarah Court have both clearly stated that this was “misconduct on an industrial scale” is that not enough?”
She added: “Then we have SMSF Investors. These investors were not sophisticated. Like many Australians, they relied on licensed advisers and regulated platforms, believing they were being guided into structures that were in their best interests. Many were steered into SMSFs without fully understanding that, by becoming their own trustee, they could lose access to protections such as APRA.
“The system is deeply flawed if ordinary Australians can be transitioned into high-risk structures without genuinely informed consent. It would be outrageous for the Government to allow these victims to simply fall through the cracks because they were deceived and manipulated into an SMSF without proper knowledge of the consequences.”
