Govt maintains ORFR reluctance on Shield/First Guardian

Mike Taylor

Managing Editor and Publisher

26 March 2026

ANALYSIS

It has become clear that the Federal Government is deeply reluctant to allow the use of the Operational Risk Financial Requirement (ORFR), last used in the wake of the Trio Capital collapse in 2011, to help remediate investors in the Shield and First Guardian collapse.

Despite the widespread acknowledgement that fraud was a factor in the Shield and First Guardian debacles, the Government and the Australian Securities and Investment Commission have proved much more focused on the remediation formulas entered into by Macquarie Investment Management Limited (MIML) and Netwealth.

Further, last week’s Federal Court judgement with respect to Macquarie has only served to reinforce the Government/ASIC approach with the judge focusing on Macquarie’s failure of governance rather than the issue of fraud.

And it is worth remembering that the use of the ORFR with respect to the Trio Capital collapse was that “Notwithstanding the conduct of some financial planners in Australia who appear to have been influenced by high commissions in recommending their clients into Trio Capital products, the fraud largely took place in offshore hedge funds”.

It is clear the Government’s motivation in encouraging remediation settlements similar to those entered into by Macquarie and Netwealth is that they have seen members promptly remediated, with ASIC noting last week that “approximately $321million was paid to affected members in September, last year”.

The Netwealth settlement has yet to be dealt with by the Federal Court, however the remediation process has been similarly prompt.

The upside for the Government is that remediation undertaken by Macquarie and Netwealth alleviates pressure on the Compensation Scheme of Last Resort (CSLR) which currently does not have sufficient funding available to handle claims flowing through from the Australian Financial Complaints Authority (AFCA).

However, while Macquarie and Netwealth could afford to remediate members, other entities being pursued by ASIC in relation to Shield and First Guardian including Equity Trustees and Diversa do not have similarly deep pockets.

Sequoia Financial chief executive, Garry Crole was the first to call for the use of the ORFR with respect to Shield and First Guardian losses and he reiterated that belief in the wake of last week’s Federal Court decision on Macquarie Investment Management.

The basis of his argument is that if fault lies with the platforms, then this dilutes the scale of claims which can be pursued against Sequoia’s licensee, Interprac.

Despite having entered an agreement to sell InterPrac, Sequoia’s legal action contesting AFCA’s determination relating to Shield advice remains on foot.