The Australian Securities and Investments Commission (ASIC) has highlighted a growing pattern of misconduct in the financial services sector, with a particular focus on superannuation switching and high-risk investment schemes.
In a recent address to the Financial Services Council Symposium, ASIC chair Joe Longo outlined the regulator’s concerns, noting that complaints related to investment advice and self-managed super funds (SMSFs) have risen sharply.
Data from the Australian Financial Complaints Authority (AFCA) indicated that investment and advice-related complaints increased by 18% in the last financial year.
Complaints involving SMSFs nearly doubled, and reports of advisers failing to act in clients’ best interests more than doubled.
Longo described a recurring scenario where individuals, often approaching retirement, are targeted by advertising and sales tactics that encourage them to move their superannuation into more complex and riskier products. These actions have resulted in significant losses for some consumers.
While most industry participants adhere to regulatory standards, ASIC has observed that the complexity and scale of recent misconduct require a coordinated approach across the sector.
ASIC has responded with a combination of public awareness campaigns and increased regulatory oversight.
The commission has launched initiatives to educate consumers about the risks of high-pressure sales techniques and unrealistic promises of investment returns.
Additionally, ASIC is reviewing the practices of superannuation platform trustees and advice licensees, particularly those using lead generation services, to assess how industry practices have evolved in response to earlier regulatory actions.
Enforcement activity has also increased. ASIC has initiated more investigations into financial advice and investment management than in previous years.
Recent cases involving managed investment schemes, such as Shield and First Guardian, have seen over $1 billion invested by more than 11,000 individuals.
ASIC’s actions in these matters have included issuing stop orders, appointing receivers, commencing court proceedings, and cancelling licences.
The investigations extend beyond advisers to include lead generators, trustees, research houses, and the operators of investment schemes.
Longo noted that ASIC’s primary objective is to preserve investor assets where possible, but acknowledged that not all affected investors will recover their losses. He also emphasised the importance of trustees and licensees maintaining strong due diligence and monitoring systems to protect consumers.
ASIC has called for a collaborative response from the financial services industry, noting that regulatory oversight alone is insufficient to address the challenges.
Longo said that industry professionals often have earlier visibility of emerging risks than regulators, and urged them to strengthen internal controls and monitoring processes.
The regulator is also advocating for legislative changes in several areas, including conflict-of-interest management, higher standards for industry gatekeepers, and reforms to the managed investment scheme sector.
ASIC has recommended expanding its data collection powers to align with international best practices and reviewing the current regime for registering managed investment schemes.
Longo stated that Australia’s regulatory framework for managed investment schemes is less stringent than those in other jurisdictions, which can create vulnerabilities. He emphasised that regulatory reform should be considered when consumer harm is significant, and that the goal is to support good practice and maintain trust in the financial system.
Longo concluded by stressing the importance of collective action to safeguard the integrity of Australia’s superannuation system.
“ASIC is working to make the system safer for consumers – but we can’t do it alone. It’s critical that we work together, if we want to rebuild trust and create a genuine transformation in perceptions of the industry. That’s what it’s going to take,” he said.
In May, ASIC released its annual surveillance plan for financial reporting and audit oversight for the 2025-26 financial year.
The roadmap continues to prioritise high-risk reporting areas and includes an expanded review of audit files.
New expectations for sustainability and climate-related disclosures have also been introduced, reflecting ASIC’s commitment to transparency and reliability in financial reporting.
