Australians Outraged as Investment Advisory Scandals Resurface

Australians are justifiably very angry at the way they have been treated by the investment advisory industry.

Just six years after a wide-ranging and comprehensive Royal Commission into the financial sector, it seems that the same sort of behaviour, financial kickbacks, and a lack of regard for the best interests of customers are becoming more common.

A series of actual and apparent failures including United Global Capital, Shield Master Fund, First Guardian Master Fund and Brite Advisors have even seen some customers apparently lose their entire superannuation savings.

Marketing payments or commissions?

At the same time, some so called “professional financial planners” have been pocketing what appears to be like the old-fashioned commissions in the form of “marketing payments”.

Some comparison websites also seem to have been functioning more like lead generation systems to encourage turnover than as ways to educate customers, while some superannuation fund investment options with deeply flawed investment models have been able to grow quickly on the back of being pushed by financial advisors and being listed on investment platforms.

Need to investigate and act urgently

Hopefully ASIC and the Australian Financial Complaints Authority will get to the bottom of exactly what has happened and why but it is going to take some time and there is no certainty of what the outcome will be.

It is also uncertain at this stage whether customers will be able to access compensation of up to $150,000 each through Australian Financial Complaints Authority and the Compensation Scheme of Last Resort.

Investment and financial advice complaints rising

So, there is little surprise that investment and financial advice complaints jumped 18% in the 2025 financial year.

The Australian Financial Complaints Authority (AFCA) said it received a total of 4,193 submissions for the period.

Prominent was a massive 95% rise in complaints involving self-managed superannuation funds (SMSFs) to 1323, representing a third of all complaints in investments and advice.

Complaints alleging failure to act in the client’s best interest rose 124% to 1266, a sign that many of the behaviour patterns that happened before the Royal Commission are rapidly creeping back.

Conflicted advice making a comeback

In the words of AFCA chief executive David Locke, there had been a “clear pattern of conflicted advice models and the inappropriate use of self-managed superannuation funds that ultimately isn’t in the customer’s best interest.”

“This only highlights the need for the Compensation Scheme of Last Resort for victims of unlawful advice.”

General superannuation complaints dropped 16% for the year to 6164, while life insurance complaints were up 5% to 1518.

Scam complaints were down but that may reflect those claims being more effectively dealt with by different bodies including banks.

Overall, AFCA still received more than 100,000 complaints in the 2024 financial year, and while this was down 4% on the previous year, it is still a massive number and shows that companies are not processing claims through their own channels when things go wrong.

It needs to be remembered that AFCA complaints can only be made after going through complaint processes with the appropriate institution, so the overall number of complaints would be far higher.

Lavish lifestyles and offshore accounts

In the case of some of these superannuation collapses, with money siphoned off overseas and reports of lavish lifestyles being led by some of those running the funds, it is to be hoped that some systematic improvements will be made to ensure that customers can once again trust financial advisors to act in their best interests.

It is simply far too soon for the many valuable lessons about corporate misbehaviour and conflicted advice models learned through the Banking Royal Commission to be forgotten.

Has conflicted advice become more devious?

If anything, some of the latest collapses and scandals seem even more devious and difficult for customers to detect than the lazy old trailing commission days when investment firms simply kept charging people for financial advice, even after they died or didn’t get any advice.

Whilst ASIC and AFCA maintain they are working hard to stamp out these emerging bouts of financial misbehaviour, there is absolutely no time to waste in coming down very hard on sales led superannuation rorts.

It is simply unacceptable for customers to be at the end of the queue when it comes to safeguarding and wisely investing their precious superannuation nest eggs.