ASIC boss Alan Kirkland warns about about investment hothouses using cold-calls to round up super savings

The Federal watchdog has raised the alarm about a new generation of cold-calling investment hothouse’s trying to snare the superannuation savings of working Australians. The Australian Securities and Investments Commission said the cold-calling had caused a “significant movement” of super savings into high-risk property managed investment schemes and greedy financial advisers. “These cold-calling operators have lead generation and referral arrangements with a small subset of financial advisers, who typically recommend consumers switch to super products incurring significant advice fees,” ASIC says. Recent surveillance activity had identified significant payments to cold call operators and evidence of “adverse consumer outcomes arising from unsuitable financial advice”. The regulator will on Tuesday begin firing out reminders to advisers, financial services licensees and super trustees about their obligations to clients and fund members. And ASIC commissioner Alan Kirkland said he would be calling on advisers and super trustees “to do more to weed out unscrupulous actors”. “ASIC . . . will take action, including enforcement action, to protect consumers from high pressure, cold-calling practices that induce inappropriate superannuation-switching,” Mr Kirkland said. “These cold-calling operators are pressuring consumers in critical retirement-saving years to move their funds into potentially inappropriate products and putting them at risk of having their super balances eroded by high fees.” The target of these cold-callers were typically people aged between 25 and 50 with balances of at least $50,000, ASIC claims. It found people who being lure into self-managed superannuation schemes ultimately overseen by the Australian Taxation Office and to super platforms regulated by the Australian Prudential Regulation Authority. Client details were often purchased from data brokers who collected information about people from publicly available online sources, websites visited by consumers, social media channels and online quizzes or competitions. ASIC said its investigations had show that some cold-caller businesses posted click-bait advertisements on social media platforms such as Facebook and Instagram. These advertisements often promoted dubious super comparison calculators that gave consumers the impression their existing fund was under-performing. ASIC will be telling superannuation trustees to review their processes to ensure they were not benefiting at the expense of people who becoming new members. The regulator will also be warning financial advisers to “steer clear of referral arrangements with cold calling business models using high-pressure sales tactics”. “Any licensee that has engaged the service of a high-pressure sales referral source should consider how this arrangement fits with its obligation to act efficiently, honestly and fairly towards its clients and act accordingly,” ASIC will tell advisers.