Investors of First Guardian Face Uncertain Future as Superannuation Fund Collapses
Thousands of Australians have been alerted to the potential loss of their retirement savings after the collapse of the First Guardian superannuation fund. Liquidators have indicated that the recovery of funds could take over a year, with significant doubts about the ability to repay investors.
Peter Spencer-Franks, one of approximately 6,000 Australians directly affected, is facing an uncertain future after investing his super with First Guardian. The fund, which collapsed this year, is currently under scrutiny by the Australian Securities and Investments Commission (ASIC). With the unexpected fallout, Spencer-Franks now worries he may end up with nothing after years of saving.
“After working your whole life to find out that the whole lot could have been in vain. It’s absolutely diabolical,” Spencer-Franks expressed in a recent interview with 7News.
Melinda Kee, another victim of the collapse, had nearly $400,000 invested. She lamented the situation, saying, “Superannuation is supposed to be safe. I’d have rather put my money in the bank.”
According to ASIC, many investors were misled into transferring their superannuation into suggestive retail choice funds, leading them to invest with First Guardian through platforms operated by Equity Trustees, Netwealth, and Diversa.
Ongoing Investigations into Fund Mismanagement
The liquidators from FTI Consulting, Ross Blakeley and Paul Harlond, have initiated inquiries to seek compensation for fund members, stating the losses could amount to as much as $446 million. Their preliminary report suggests that recovering some of the fund’s assets may be unlikely. Notably, much of the invested capital appears to have been channelled into illiquid assets, such as property developments or company shares associated with common directors, raising further red flags.
The report highlighted that many investments are expected to suffer significant shortfalls from their recorded values. The liquidators are also undertaking further investigations to determine if there have been any breaches of the Corporations Act or associated laws during the fund’s operation.
They noted that the entire process of unraveling the fund’s complexities could extend beyond 12 months.
Legal Actions and Investor Warnings
In light of the situation, affected investors are exploring the possibility of forming a class action and can also reach out to the Australian Financial Complaints Authority (AFCA). However, it’s essential to note that AFCA’s compensation cap is set at $150,000.
ASIC has issued warnings to the public about the risks associated with high-pressure sales tactics and misleading advertising that entice individuals to switch their superannuation into riskier investments. ASIC Deputy Chair Sarah Court advised the public to be vigilant: “When it comes to sales calls about super switching, there are some big red flags people should be alert to — being asked to make a quick decision is one of the most obvious. Remember, a good deal won’t vanish overnight.”
With many Australians now facing the grim prospect of financial insecurity, the circumstances surrounding the First Guardian collapse serve as a cautionary tale about the importance of due diligence in superannuation investments.
