Consensus – product provider advice lead generation dangerous

Mike Taylor

Managing Editor and Publisher

27 May 2026

Lead generation activity funded and directed by financial services product providers appears likely to be banned when the Treasury and those advising the Minister for Financial Services, Daniel Mulino, digest submissions from major stakeholders.

While the industry funds movement, as represented by the Super Members Council, wants a total ban, the Financial Advice Association of Australia (FAAA) wants a focus on lead generation driven by product providers.

The FAAA is hoping to protect the ability of financial advice businesses to participate in client referrals and to legitimately build their client bases, whereas the SMC wants the lead generation door slammed shut whether it is by licensed or unlicensed operators.

Responding to Treasury’s discussion paper on lead generation, the FAAA is clearly seeking to prevent the Government legislating to throw the baby out with the bathwater by suggesting that the activities of Shield and First Guardian were at the extreme end of the scale.

“The area of the Shield and First Guardian matters related to conflicted remuneration that most concern us, is the notion that a product provider could pay a lead generator for the provision of leads to a financial adviser, where there is a clear expectation that this financial adviser will favour the product provider who has paid for the leads,” the FAAA said.

“We believe that this could be addressed by a complete ban on product providers paying for any leads. This should be banned by Section 963C of the Corporations Act (ban on nonmonetary benefits).

“We are also concerned about how it might have been possible for First Guardian to pay an entity, presumably related to an advice licensee, $19m without breaching the conflicted remuneration provisions. Why wasn’t the payment to a related entity caught by the conflicted remuneration provisions? We are also concerned that the direction of payments through a third party could be used to avoid the prospect of prohibition under the conflicted remuneration rules.”

The FAAA submission said it was concerned by the provision of paid leads by a product provider to a financial advice practice, where there is a clear expectation that they will use the product provider’s product.

“This seems to be what has happened in the Shield and Frist Guardian matters. From what we have seen, we are also concerned by a financial adviser sharing initial and ongoing financial advice fees with a lead generator.

“Evidently some of these fee splits were very substantial amounts, which would serve to force the advisers to cut costs in the advice process and overly rely upon information obtained by the lead generator, rather than do their own enquiries.

“It is our view that any payment for a lead (where permitted) should be a fixed amount, and an initial payment with no ongoing payment. Our least level of concern is with respect to a financial advice practice paying for genuine leads for people who want, financial advice where they have used this to identify potential clients who reflect their target market where there has been no positioning about any specific product,” the FAAA said.

For its part, the SMC said banning lead generation “is the single most effective way to stop devastating harm to Australians before it happens – “by shutting down the high-pressure sales pipeline that pushes them into moving their super into high risk products like the collapsed Shield and First Guardian schemes”.

“The current regulatory framework is being gamed, with lead generation models breaking the sales process into multiple steps that can individually appear legally compliant but collectively lead to devastating consumer harm.

“A network of operators runs ads, harvests data, qualifies the sales lead, makes the cold call, books the meeting, and then hands the consumer to an adviser who pays the lead generator a cut of the fees the consumer will end up paying out of their own super,” the SMC said.