The Super Members Council (SMC) has urged the government to outlaw superannuation lead generation practices, warning aggressive online sales tactics are funnelling Australians into risky investment schemes and exposing retirement savings to significant losses.
Its call follows the collapse of Shield and First Guardian, which collectively left thousands of Australians facing losses exceeding $1 billion after being drawn into the products through social media advertising, clickbait promotions and referral networks.
In a submission to Treasury, the council argued the current system allowed operators to split the sales process across multiple parties, enabling each step to appear compliant while still steering consumers towards unsuitable or high-risk financial products.
SMC said many lead generation campaigns were marketed as “super health checks” or comparison tools, but instead operated as sophisticated sales pipelines designed to collect personal data, pressure consumers and redirect super balances.
The council rejected suggestions that stronger licensing rules alone would solve the issue, pointing out that two lead generators connected to the Shield and First Guardian cases already held licences.
According to the submission, advisers often pay lead generators a share of fees ultimately deducted from members’ superannuation accounts, creating incentives to push consumers into switching products.
Research commissioned by SMC through Ideally found four in five Australians using social media supported banning lead generation activity, while more than 70 per cent said they found it difficult to distinguish between scams and advertising from reputable organisations.
The industry body said legitimate member engagement activities, including communications from super funds and workplace super information, should be exempt from any ban.
SMC is also pushing for the reforms to align with the government’s Delivering Better Financial Outcomes agenda to ensure Australians can still access safe financial guidance.
“These sorts of clickbait ads and high-pressure sales funnels are putting Australians’ life savings at risk, misleading them into switching into high-risk products like the collapsed Shield and First Guardian schemes,” said SMC chief executive Misha Schubert.
“Incremental changes — such as adding a bit more disclosure or tighter licencing rules — simply will not be enough to stop this terrible harm – and would risk just shifting dangerous pressure sales into new forms.”
“The most effective fix is to ban this conduct outright — to stop the harm before it can happen.”
