Cruel blow for First Guardian victims as AFCA’s compensation of last resort window times out

First Guardian investors are slowly putting claims in with AFCA in the hopes of getting compensation, but for some victims it’s already too late.

Pictured are the First Guardian CEO David Anderson’s Hawthorn mansion and CIO Simon Selimaj’s Lamborghini.

First Guardian investors tipped into the collapsed fund by financial advice firm United Global Capital have been locked out of a last-resort compensation scheme after missing a deadline many of them knew nothing about.

Melbourne-based UGC fell into liquidation in June 2024 after the corporate cop cancelled its licence, but clients only had until May 31 to lodge a claim with Australia’s financial complaints authority. After this date, UGC was expelled as an AFCA member.

More than a third of UGC’s 1200 clients were invested in First Guardian but many of them were unaware there was any issue with the advice provided by UGC until after First Guardian collapsed, which happened in April, giving them just six weeks to act.

Over 12 months starting from mid-2024, the Australian Securities and Investments Commission sent UGC clients three emails informing them of the May 31 deadline. All were sent before First Guardian was put into liquidation, and only the last, sent on April 2, mentioned First Guardian in passing.

The ombudsman, the Australian Financial Complaints Authority, can extend a deadline before expelling a member, as it did twice with Dixon Advisory.

The Australian understands AFCA met on April 1 and considered extending UGC’s membership but ultimately made the call to stick to the original timeline.

First Guardian investors are now putting claims in with the ombudsman in the hope of getting some compensation but for victims like Linda Richards, a former UGC client, it’s already too late.

Ms Richards had her retirement savings tied up in the First Guardian fund since 2021, when she was cold-called by UGC, whose advisers got her to set up a self-managed super fund and invest in the now-collapsed scheme.

“They told me how good the fund was ... that I’d have up to $400,000 in super by retirement,” Ms Richards told The Australian.

When she first rolled her savings over, she had a retirement nest egg of a little over $100,000. Over the years, the balance kept growing, until last year, when her adviser told her the First Guardian fund was suspended and her money was locked up. This was an adviser she had dealt with at UGC who had since moved to another advice firm.

As far as Ms Richards was concerned, the issue was First Guardian and its responsible entity, Falcon Capital.

By the time she realised UGC was part of the problem, it was too late. Like others, she now has no hope of getting any of her money back through the compensation scheme of last resort, a scheme set up solely to aid victims of financial misconduct.

First Guardian’s liquidators have yet to give an estimate of how much money investors may get back but their initial report, released last month, made for a grim read that suggested substantial savings could be lost. That means AFCA, and the last resort scheme, could be the only avenue for First Guardian victims outside of what liquidators recover.

For Ms Richards, who is in her mid 50s and had been looking forward to a comfortable retirement, being locked out of the compensation scheme is another cruel blow to come to terms with.

“I’ve been working full time since I was 18. I’m nearly 54 now. So what am I going to do? I can’t retire.

“The government requires us to put this money into super, so they should be regulating it and ensure funds can’t just go under.”

An investigation by The Australian revealed the First Guardian/UGC connection back in February.

Graham Wilson* (not his real name) was contacted by cold-calling firm Empire Wealth Group in 2020 and put through to a financial adviser at UGC. On their advice he set up an SMSF and put his super savings into First Guardian.

Like Linda, he never realised there was anything amiss on the UGC side. When First Guardian froze redemptions in May 2024, Mr Wilson was worried about his money but made no connection between the fund’s challenges and the advice he received.

“At that stage First Guardian were still reassuring investors via updates that the fund was OK; there was no reason I could see to make a complaint against UGC,” he told The Australian.

“By the time First Guardian was put into liquidation my concern was about getting my money back, not chasing up my adviser – I was also no longer a client of theirs.”

Once First Guardian collapsed in April, Mr Wilson put a claim in with AFCA straightaway. But his complaint was against First Guardian’s responsible entity, Falcon Capital, not UGC.

AFCA, which has been criticised for excessive delays in assessing and dealing with complaints, did not respond until 10 weeks later, on June 25. By then, it was too late.

“My complaint was rejected and I was advised it should have been against the advisers. But UGC’s membership of AFCA was cancelled at the end of May and I’m now unable to register a complaint against UGC and get a determination for compensation from CSLR,” he said.

AFCA advised him there was nothing more it could do.