Netwealth hit with $100m compensation
Platform Netwealth has agreed to pay over $100 million in compensation to more than 1,000 people who invested their superannuation in the First Guardian Master Fund.
In doing so, Netwealth has admitted to contravening the Corporations Act, according to the Australian Securities and Investments Commission (ASIC).
At the same time, the Australian Prudential Regulation Authority has entered into an enforceable undertaking with Netwealth requiring it to “address material weaknesses in investment governance framework and practices”.
ASIC said it had commenced proceedings in the Federal Court against Netwealth Superannuation Services Pty Ltd (NSS) and Netwealth Investments Limited (NIL), as trustees of the Netwealth Superannuation Master Fund (NSMF).
NSS and NIL have admitted they failed to obtain and therefore did not assess sufficient information about the First Guardian Master Fund, or make sufficient independent enquiries, to understand or evaluate the investment risk in the First Guardian Diversified Class and Growth Class prior to or while offering them as investment options to NSMF members.
ASIC will seek orders that NSS and NIL failed to do all things necessary to ensure that the financial services covered by their financial services licences were provided efficiently, honestly and fairly.
ASIC has also accepted a court-enforceable undertaking from NSS and NIL to ensure members are compensated 100% of the amounts they invested in First Guardian less any amounts withdrawn. The compensation payments will be made by 30 January 2026.
ASIC Deputy Chair Sarah Court said the ongoing investigation into First Guardian including work to recover available money for investors was at the heart of ASIC’s enforcement priorities.
“This is a welcome outcome for many Australians and stems the significant losses that threatened their retirement savings.
“More than 1,000 members who invested through Netwealth’s superannuation platform were facing huge uncertainty when First Guardian collapsed.
“ASIC’s investigation will ensure Netwealth restores these members to the position they were in before they saw their savings eroded.
“This is the fourth action we’ve taken against a superannuation trustee in relation to our ongoing First Guardian and Shield investigations, and follows ASIC securing the payment of $321 million to Shield investors by Macquarie”, the Deputy Chair said.
NSS and NIL have admitted the allegations in the proceeding. It is a matter for the Court to determine whether the declarations are appropriate.
ASIC will not seek a pecuniary penalty due to the exceptional circumstances of this matter, including:
- the strong public interest in obtaining a timely court-based outcome which will encourage other superannuation trustees to comply with their legal obligations in the context of choice platforms,
- the interests of providing affected members who invested into First Guardian through a regulated superannuation fund with certainty in a timely manner, and
- the level of cooperation demonstrated by NSS and NIL in agreeing to compensate members 100% of the amounts invested in First Guardian less any amounts withdrawn, without waiting for an outcome of the First Guardian liquidation or proceedings against other parties involved.
‘The action we’ve taken in the last few months puts super trustees well on notice: they are gatekeepers for their members’ retirement savings and ASIC expects them to take active steps to monitor the funds they make available on their choice platforms.
‘ASIC now has 12 cases underway against 20 defendants and is continuing to investigate misconduct relating to Shield and First Guardian to hold those involved to account’, the Deputy Chair said.
ASIC notes that APRA accepted a Court Enforceable Undertaking from NSS on 17 December 2025 to uplift its processes and procedures for investment governance. ASIC and APRA continue to work closely together to hold trustees of regulated super funds to account consistent with ASIC and APRA’s respective mandates.
With respect to the APRA action, the regulator said:
Netwealth has acknowledged APRA’s concerns in the CEU and has committed to:
- engage an independent expert to perform a review of high-risk investment options on its platform menu, ensuring the continued inclusion of each option is in members’ best financial interests and any related findings of the review are addressed;
- engage an independent expert to perform a review of its investment governance framework (Framework Review);
- develop and implement a remediation uplift plan to rectify any deficiencies or incorporate improvements identified through the Framework Review, and provide APRA with assurance that the actions have been implemented; and
- review all investment options on its investment menu against the uplifted investment governance requirements, including enhanced onboarding and monitoring criteria, to determine their ongoing suitability.
APRA said its review of Netwealth identified concerns regarding Netwealth’s:
- oversight, knowledge and due diligence of new investment options offered to members on its platform;
- triggers and controls relied upon to monitor and review investment options and ensure any performance or risk concerns are escalated and addressed appropriately; and
- management of potential conflicts of interest arising from outsourcing services to its related party, Netwealth Investments1, and with other third parties that operate, manage, or advise on platform investment options.
So, once again, we have a platform that put a ‘low investment grade’ fund on their platform. And then they throw the researcher under the bus. Netwealth, not only should you cough up for the FG investors but all parties you hurt in this saga.
Ah I think there are a wide range of parties at fault, failed and or fraudulent from many:
So why is it all NetWealths fault ?
@ please explain.
I don’t know how long you have been a financial planner, but if it isn’t all that long, there are things you should know in relation to this or any other platform.
Most platforms since Noah built the Ark, will not put an investment on their investment list for advisers to use unless there is scale (FUM), reasonable long-term performance supported by research or adviser agitation with a promise of large-scale support if it’s made available.
Most platforms either refer to research houses as a guide for adding products on their platforms that have a connection with Morningstar, Zenith, or Lonsec.
I would suggest that the fault may lay with adviser agitation to add these funds on the Netwealth and Macquarie platforms, so you figure out who should be held accountable.
And you shouldn’t leave out the motivation of self-interest and all those involved, sat and passed an “Ethics” exam.
Just a thought, but in relation to SMSF trustees investing into the Dixon Advisory investment options, do they hold any liability in relation to investing their members money into the Dixon property funds? Should the trustees have recognised their overallocation to property in a foreign jurisdiction, which carries more risk?
When you read this statement it does raise some thoughts,
“NSS and NIL have admitted they failed to obtain and therefore did not assess sufficient information about the First Guardian Master Fund, or make sufficient independent enquiries, to understand or evaluate the investment risk in the First Guardian Diversified Class and Growth Class prior to or while offering them as investment options to NSMF members.”