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Australia’s corporate regulator filed civil penalty proceedings against two financial services companies Wednesday, alleging critical oversight failures that exposed nearly 7,000 Australians to unsuitable investment advice and left $677 million in retirement savings at risk following the collapse of two superannuation funds.
The Australian Securities and Investments Commission sued Interprac Financial Planning for allegedly failing to ensure its authorized representatives acted in clients’ best interests when recommending the Shield Master Fund and First Guardian Master Fund, both of which have since collapsed. ASIC alleges Interprac relied entirely on external research to approve the funds, ignored red flags including questionable payment arrangements, and allowed some clients’ superannuation to be invested without express consent. In separate proceedings, ASIC sued research house SQM Research for allegedly publishing misleading “Favorable” ratings for Shield despite failing to obtain critical information needed for proper assessment—marking the first time the regulator has taken legal action against a research firm. ASIC Deputy Chair Sarah Court said the alleged failures represented a breakdown at multiple levels of the financial advice system, stating that “no competent financial adviser could have recommended Australians invest large amounts of their superannuation in these funds.”
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