Dodgy advisers, cold callers fleecing workers out of super savings 

More super savings are flowing into shady schemes thanks to a loophole allowing financial advisers to work with cold callers. Here’s what you need to know.

ASIC is warning consumers to be wary of cold callers pushing financial products.

Dodgy financial advisers are working with cold callers to push unsuspecting Australians into higher-risk, lower-performing super investments, charging thousands of dollars in fees in the process.

The Australian Securities and Investments Commission on Tuesday issued a warning over the shady operators and their online baiting tactics, adding that “considerable volumes” of super savings were flowing into high-risk property managed investment schemes.

The financial watchdog has identified two key ways cold callers are getting information on consumers, ASIC Commissioner Alan Kirkland told The Australian.

“One is through buying or acquiring information from third-party sources like data brokers. The other way is through social media ads. People have probably seen ads or posts on services like Instagram, encouraging them to have their super reviewed. That’s a key way that these sorts of businesses are getting people to hand over their personal information and they can then be targeted by a cold call,” he said.

Operators tend to target Australians between 25 to 50 years of age, with a risk of nest eggs being eroded by the super switching, Mr Kirkland added.

“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.

“The small subset of financial advisers benefiting from this conduct threaten to undermine the reputation of the rest of the industry,” he warned.

These dodgy operators are using a loophole in anti-hawking legislation, which covers financial products but not financial services.

The carve-out in the current anti-hawking legislation was permitted for advisers as this segment of the market was already captured by the best interests duty, which requires that advisers act in the best interests of clients when providing financial advice.

But ASIC can, and is, taking action on cold callers giving unlicensed financial advice and advisers who are not acting in the best interests of clients.

Mr Kirkland said people who get cold calls on their superannuation should simply “hang up”.

“There’s nothing to lose by hanging up if you’re on a call with someone who’s encouraging you to switch a super product. If you need to speak to your own financial institution, you can always ring them through the official number that’s listed on their website. You don’t need to give away personal information or have complex financial conversations when somebody has (cold) called you,” he said.

Considerable volumes of super savings have been flowing into high-risk property managed investment schemes and associated payments made to cold calling businesses, the regulator said.

Mr Kirkland said ASIC was prepared to take action to protect consumers and called on financial advice licensees and super trustees to do more to weed out unscrupulous actors and reduce consumer harm.

“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.

“Financial advice licensees and super trustees have a critical role to play in preventing this conduct, including by reporting it to ASIC if and when they become aware of the conduct,” Mr Kirkland said.

Super Members Council executive general manager for policy, Mel Birks, said reputable financial advisers would not use cold callers to sell their services.

“Too many super fund members have already ended up being charged a massive advice fee and plonked into a poorer performing super product,” she said.

“Financial planners should not be able to use cold-calling lead generation businesses – and reputable advisers would never use this practice.”