The collapse of the First Guardian Master superannuation fund could spark major changes to how the government supports ns who lose money due to bad financial advice.
For now, people who lose money when a financial company collapses can claim up to $150,000 through a government-run scheme called the Compensation Scheme of Last Resort.
But the scheme has limited funding because it’s paid for by finance companies via annual levies.
Each year, the scheme can only pay out a total of $250 million across all claims. Additionally, there’s a cap of just $20 million for each part of the finance industry, such as financial advice.
This has led to serious shortfalls. For example, the scheme recently estimated it would need $70.1 million just to compensate victims of bad financial advice.
That leaves many victims without the compensation they’re owed, even though they did nothing wrong.
Assistant Treasurer and Financial Services Minister Daniel Mulino has now ordered a review of the scheme to examine how it can be made fairer, especially for people who were misled by financial advisers, who make up most of the claims.
Meanwhile, the liquidators of the First Guardian Master Fund have admitted they won’t be able to repay everyone, despite its director, David Anderson, 46, owning a $9 million Melbourne mansion.
The collapse has devastated 6,000 everyday Aussies like Canberra couple Simon and Annette Luck, who lost $340,000 – almost all their retirement savings – due to bad advice from a financial planner.
They had been planning a trip to the Netherlands and the UK to visit family. Now, they may need to sell their home and live in a caravan just to get by.
‘Disheartened, dismayed and downright disappointed and let down,’ Annette Luck told Daily Mail .
The First Guardian Master Fund was placed into liquidation in March after the n Securities and Investments Commission obtained a Federal Court order to freeze its assets.
The liquidators, FTI Consulting, have now revealed that $446 million could conservatively be owed to retirement savers, after their superannuation was invested in dubious ventures, including $242 million sent overseas.
‘The liquidators have preliminarily estimated that claims by unitholders on a cash invested basis that have not been redeemed approximate $446 million,’ they said.
‘Significant monies have been invested (or sent) offshore in foreign jurisdictions.
‘Much has been invested in technology ventures, none of which appear to have yet been commercialised and are thus not generating an income.’
David Anderson 46, a director of the super fund and parent company Falcon Capital Limited, is accused of siphoning millions of dollars into his personal bank account.
Before the fund collapsed, he bought a $9million Yarra River mansion in the upmarket Melbourne suburb of Hawthorn in 2020.
Fellow director Simon Selimaj, 63, had a $548,000 Lamborghini Urus registered in his name.
‘The vehicle was purchased in January 2023 by the company for $548,000 including on-road costs and was funded via a bank account controlled by the company,’ the creditors’ report said.
The Lamborghini, which the liquidators have since seized, is estimated to now be worth $350,000 to $400,000, with Slattery Auctions taking possession of it.
This new review is examining how to deal with compensation claims that collectively exceed a $20million cap for a finance industry sub-sector, with ASIC collecting the levies every financial year.