Cbus CEO Kristian Fok has described lead generators promoting superannuation switches as “the wild west”.
Lead generators have come under scrutiny in recent months from both APRA and ASIC after consumers were encouraged by social media ads to switch their superannuation into alternative options, which typically incur higher fees and lower performance.
“What seems like a harmless comparison or financial check-up is often the gateway into the wild west of superannuation and financial advice in Australia,” Fok wrote in an op-ed for The Australian.
“These cowboys operate with little oversight, trampling all over anti-hawking laws and undermining the security of the super system. They create a sense of uncertainty and fear, making people feel uncomfortable about their financial situation, while promising tremendous, almost guaranteed returns elsewhere.”
For Cbus members who are typically employed in construction or blue-collar roles, Fok said the possibility of switching super fund was particularly concerning, as these alternative options often lacked the critical insurance and risk coverage that these jobs and their employees require.
“There is no mention of risk, nor any warning about the loss of insurance, which is particularly important for blue-collar workers who work in construction and building jobs often excluded from standard insurance policies,” Fok said.
A high-profile example of lead generation in action saw more than 11,000 Australians affected by investments in the Shield Master Fund and First Guardian funds. This activity was described by Fok as being “the tip of iceberg” when it comes to scammers and online advertising.
In August, ASIC announced it has commenced civil penalty proceedings in the Federal Court against Equity Trustees, which oversaw the investment of “around $160 million of retirement savings into Shield over 2023 and 2024 through its fund”. Meanwhile, Macquarie has agreed to pay $321 million to affected super members over their Shield losses.
To work together to combat this scourge, Fok recommended super funds work with regulators and governments to provide education and information to their members.
“Funds can work with the regulators and governments to ensure sound outcomes while looking to provide proactive education and information to members. The system is rightly designed to be competitive and to allow Australians free choice. But that free choice should not expose super members to scams or inappropriate products,” Fok said.
“As an industry we have a responsibility to speak up for members and call for changes. It’s time to work together to ban online lead generators for superannuation and financial advice. Australians working and saving hard for their retirement deserve better than the wild west.”
