‘Dodgy shonks’: Latest warning on superannuation cold-call rip-offs

As if phone calls from random numbers couldn’t get more annoying, the alarm has been raised about these dodgy cold callers.

Clickbait ads are harvesting data and onselling contact details to dodgy financial advisers pushing high-fee superannuation accounts via dubious, high-pressure cold-call sale tactics.

The ACCC published a warning on the practice earlier this year, but the Super Members Council says fraudsters are exploiting legal loopholes.

Anti-hawking legislation bans the unsolicited selling of financial products, but the loophole is when cold callers secure exorbitant advice fees from unsuspecting consumers, often charged from their super account. The government advice is to hang up the phone if you’re stuck on a cold call.

Victims often do not get to read all the legally required information before making changes to their superannuation. Picture: iStock

“Reputable financial advisers do not rely on third parties to cold-call Australians to sell their services and using cold-call lead-generation for financial advice should be banned,” Super Members Council chief executive Misha Schubert said.

“These groups use clickbait-style social media posts, cold calls and high-pressure sales tactics to convince people to change super funds.

“Super fund members are then charged a massive advice fee and plonked into a poorer-performing super product. This predatory practice needs to end.”

Misha Schubert says the schemes are predatory. Picture: Eamon Gallagher

Rorts of this nature are fragmented, but basically; a phone number is obtained, a cold caller offers to review your superannuation, perhaps saying your current fund is “not on the right track” and you could get better returns with another fund.

The consumer is then bounced to a licensed financial adviser. The adviser creates a statement of advice. The Australian Securities and Investments Commission has found examples where these statements of advice have made misleading statements about high returns.

A mock-up of a predatory social media ad. Picture: ASIC

The consumer has been hit with tens of thousands of dollars of upfront fees, put into high-risk funds, not been given the chance to read the statement of advice and been saddled with high ongoing fees.

Ms Schubert said the practice needed to stop.

“Australians should hang up on unsolicited calls offering to connect them to a financial adviser to review their super, as they likely lead to a shonky financial adviser,” she said.

“While the regulator does crack down on individual advisers offering inappropriate advice after using cold-calling lead generation, the practice of cold-call lead generation selling financial advice is not yet banned.”

The schemes often begin with data brokers selling a person’s contact information.

ASIC finalised a detailed review of the practice in May. The regulator found considerable volumes of superannuation fund movement as a result of cold-calling conduct, including, high-risk property investments and significant payments to cold-calling operators.

The targets are usually aged between 25 and 50 with balances of at least $50,000.

Contact details are often purchased from third-party data brokers, with data collected from publicly available online sources, websites visited by consumers, social media channels, and

online quizzes or competitions.

Financial Services Minister Stephen Jones introduced legislation last year to define the objective of super. Picture: NewsWire / Gary Ramage

But the data brokers have been bypassed in some instances by clickbait-style ads on Facebook and Instagram offering superannuation calculators.

ASIC’s whack-a-mole hunt for such practices began with the banning of Queensland-based financial adviser Smart Solutions in 2020.

The financ, and financial services ministers were contacted for comment. ASIC has a breadth of warnings and information available.

Originally published as ‘Dodgy shonks’: Latest warning on superannuation cold-call rip-offs