Corporate regulator ASIC is raising alarms over certain cold calling operations that employ high-pressure sales tactics and deceptive online advertisements to push consumers into questionable superannuation switching advice.
An ASIC review highlighted that these operators often obtain personal details from third-party data brokers or via online click-bait to make unsolicited calls to consumers.
ASIC Commissioner Alan Kirkland (pictured above) emphasized that these operations predominantly target Australians aged 25 to 50, significantly jeopardizing their retirement savings.
“Some of these cold calling operators are pressuring consumers in critical retirement-saving years to move their savings when it is not in their best interests, putting them at risk of having less super as a result of inappropriate investments, fees and charges,” Kirkland said.
The review found that a small number of financial advisers, who benefit from referrals by these cold calling businesses, often advise consumers to switch into super products that come with high fees.
“The small subset of financial advisers benefiting from this conduct threaten to undermine the reputation of the rest of the industry,” Kirkland said.
It was noted that significant amounts of superannuation savings are being directed into high-risk property managed investment schemes, either through platform super products regulated by APRA or via self-managed super funds (SMSF), with notable payments going to the cold calling firms involved.
Kirkland declared that combating these unethical practices is a priority for ASIC, which is prepared to take stringent enforcement actions to protect consumers. He also urged financial advice licensees and super trustees to enhance their monitoring and reporting mechanisms to help prevent such unethical behaviour.
“Deterring cold calling for superannuation switching models is an ASIC priority, and we will continue to take action, including enforcement action, to protect consumers from high pressure, cold calling practices that induce inappropriate superannuation-switching,” he said.
In response, ASIC has launched a consumer awareness campaign instructing individuals to “just hang up” on unsolicited calls and to “just scroll past” suspicious online advertisements. Additionally, ASIC plans to publish a report on how trustees oversee advice fee charges, aimed at offering further guidance on protecting consumers from financial harm.
Since 2020, ASIC has taken serious actions against this type of business model, beginning with the revocation of the Australian financial services (AFS) licence of Smart Solutions and including various adviser bannings, financial advice licensee cancellations, and even criminal convictions for hawking. This ongoing effort underscores ASIC’s commitment to cleaning up the financial advisory sector and safeguarding Australian consumers.
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