Beware of cold callers offering to switch your super (Scam Awareness Update)

Published on 10 June 2024 by Drew Pflaum
Categories: Insights & Updates

Relevant For:

Australian investors and superannuation holders.

Key Points:

• ASIC warns against cold callers urging super fund switches using personal data from brokers or baiting techniques.
• Particular note to people aged 25-50, due to significant risk of reduced retirement savings due to unsuitable investments and high fees.
• ASIC calls for increased vigilance from super trustees.
• Public advised to ignore cold callers and suspicious social media offers.
• Quality financial advice is detailed and takes time, unlike the rushed advice from cold callers.
• Consumers should report inappropriate financial advice and scams to their super fund, Scamwatch, and ASIC.

Full Article:

Following an extensive review, ASIC has uncovered a worrying trend where cold callers, after procuring personal details from third-party data brokers or through online baiting techniques, have been aggressively pushing consumers to switch their superannuation funds. These cold callers have been found collecting the details of people who use certain online comparison websites, or running competitions for prizes such as phones or gift cards and subsequently misusing the entrants’ details. These operations often have ties to a minority of unethical financial advisers who then suggest moving the consumers’ funds into superannuation products that carry hefty fees.

ASIC has expressed particular concern about these practices, noting that individuals aged between 25 and 50 – typically the primary targets of these operations – are at risk of significant retirement savings depletion due to reduced super value from unsuitable investments and excessive fees and other charges.

In addition, ASIC has observed a substantial flow of super savings into high-risk property managed investment schemes. These schemes are either channeled through super products offered by Australian Prudential Regulation Authority (APRA) regulated funds or self managed super funds (SMSFs), with subsequent kickbacks going to the cold calling entities.

ASIC has reiterated its commitment to safeguarding consumers, and is urging financial advice licensees and superannuation trustees to intensify their efforts in rooting out the nefarious elements that are targeting people’s super. ASIC will continue to take appropriate action, including enforcement action, to deter cold calling.

To raise public awareness, the regulator has launched a campaign advising consumers to hang up on cold callers and scroll past social media click bait offers to compare and switch super funds.

ASIC notes that a typical super cold calling experience does involve receiving a statement of advice (SOA) prepared by a financial advice firm – often one that the cold caller has an existing arrangement with – but it is usually “cookie cutter” advice that is expensive, unnecessary and does not consider a consumer’s individual needs, and may eventually leave the individual in a worse financial position. It reminds consumers that quality financial advice takes weeks, not days, to prepare.

Consumers who believe they have received financial advice that was not appropriate for their circumstances can initiate a complaints process, which includes contacting the business that gave the advice, then contacting the Australian Financial Complaints Authority (AFCA). Consumers who believe they have been a part of a scam should report it to their super fund at the first instance, as well as reporting it to Scamwatch and ASIC.