Will Shield and Guardian fall-out change the eco-system?
ANALYSIS
As financial advisers contemplate the future costs of associated with funding the Compensation Scheme of Last Resort (CSLR) they may care to reflect upon the complexity of the recent product failures likely to feed into those costs.
The two failures of note are, of course, the Shield Master Fund and the First Guardian Master Fund, which between them have placed close to $1 billion in investor funds at risk – $466 million on the part of Guardian and $480 million on the part of the Shield Fund.
While, a decade ago the collapse of Storm Financial was the catalyst for the Future of Financial Advice changes – the question in 2025 is whether the Shield and First Guardian issues will achieve similar change with respect to the eco-system around managed investments.
Also worth considering is the release last week of a Liquidators Report into the Guardian Master Fund which noted that “a large proportion of investors in the FGMF invested through investment platforms”.
“Investors who invested through a platform, and remain invested through that platform, hold their interests in the FGMF through that platform rather than directly with Falcon and the FGMF,” the report said.
“Those platforms are the formal registered Unitholders. Whilst the liquidators recognise that those indirect investors are interested parties, they should continue to liaise with those investment platforms regarding their investments.
The report then went on to name the platforms as:
- Netwealth Superannuation Services
- YourChoice Super via Diversa Trustees Limited
- AusPrac Super via Diversa
- Praemium Super via Diversa
- Equity Trustees also known as EQT
All of which gave rise to ASIC deputy chair, Sarah Court, referencing the regulator’s ongoing investigations into the role of the platforms along with those of players in the MIS investment food chain.
It is lost on no one in the financial planning sector the importance that investment funds place on being rated by a reputable research and ratings house and then being included on a platform investment menu.
The concern that ASIC has over the issue is reflected in the fact that it used its post-election briefing to the re-elected Albanese Labor Government to deal with the First Guardian and Shield matters under the heading of “misconduct exploiting superannuation savings”.
The heavily redacted ASIC document, provided under Freedom of Information (FOI) rules noted that First Guardian and Shield are registered managed investment schemes.
“In June 2024, ASIC took court action against Keystone Asset Management (now in liquidation) due to concerns relating to the possible mishandling of significant superannuation monies invested in Shield Master Fund (Shield),” the ASIC briefing to Government said.
“In February 2025, ASIC also took court action against Falcon Capital due to concerns about the operation and management of a registered managed investment scheme called the First Guardian Master Fund and appointed a receiver to the property of David Anderson, a director of Falcon Capital.”
Quite how ASIC believes the Government should proceed on such issues is an unknown, given that its recommendations included under the heading “opportunities for reform” were entirely redacted in the FOI document.
In the meantime, the Financial Advice Association of Australia (FAAA) and the SMSF Association have urged the early release of the current post-implementation review of the CSLR notwithstanding a clear message from former Assistant Treasurer and Minister for Financial Services, Stephen Jones, that including Managed Investment Schemes in the funding formula is not on the table.
Disgraceful that ASIC would redact so much of their report. And a perfect illustration of their contempt towards taxpayers.
ASIC’s corrupt conduct needs to be investigated. What on earth needs to be redacted to that degree? ASIC’S abuse of power and corruption have been going on for far too long and everyone just turns a blind eye to it.