Government: Daniel Mulino’s proposed superannuation crackdown targets cold-calling

The government is preparing reforms to stop unlicensed lead generators cold-calling Australians to persuade them to switch superannuation providers. The proposed changes respond to the collapse of the Shield and First Guardian funds, but the available reporting does not establish that the reforms have yet become law.

Daniel Mulino’s proposed superannuation crackdown targets cold-calling

Assistant Treasurer and Financial Services Minister Daniel Mulino is due to announce the package at the National Press Club on Wednesday, 19 August, according to ABC News and the Australian Financial Review.

Under the proposal, businesses that generate leads by making unsolicited approaches about superannuation would need to be licensed. Unlicensed telemarketers would be banned from cold-calling consumers to encourage them to move their retirement savings, the reports say.

Lead generators can contact people after they respond to online advertising, including advertisements offering to help find lost super or check existing super accounts. Those contacts can then result in a referral to a financial adviser who recommends switching superannuation arrangements, according to ABC News.

The proposed changes would not introduce the outright ban on superannuation advertising sought by some consumer groups. The reported package would include exceptions for advocacy, educational and employment communications.

The reforms would also strengthen Australia’s anti-hawking rules. The measures are expected to include tougher penalties for breaches and tighter requirements around consent before consumers are contacted. The existing exemption allowing financial advisers to proactively contact people would be limited to relationships with existing clients, the Australian Financial Review reports.

Licensees would also be required to take reasonable steps to ensure lead-generation activities comply with relevant legal and regulatory requirements. The stated aim is to intervene earlier, before harmful operators gain access to potential customers.

Why the reforms are being proposed

The package follows the collapse of the Shield and First Guardian funds. ABC News reports that about 12,000 people lost more than $1 billion in retirement savings across the collapses, exposing weaknesses in the regulation of Australia’s retirement savings system.

One case described by ABC involves Michael and Caroline Johnson, who lost about $500,000 after moving their superannuation from retail funds into a joint self-managed super fund. Michael Johnson said the process began after he saw an advertisement on Facebook, was contacted by a lead generator and was later connected with financial advisers at United Global Capital.

The reports do not establish that every lead-generation business or financial adviser involved in superannuation switching breached the law. They do show that regulators and consumer advocates have warned that scammers are targeting retirement savings, while the proposed rules are aimed at the initial advertising and contact process.

What is confirmed and what remains unresolved

The reported measures are a proposed regulatory response, not a confirmed ban already in force. Mulino’s National Press Club appearance is the stated point at which the package is to be announced, and the available reports do not provide a commencement date or details of the legislation needed to implement it.

It is also not yet clear from the reporting how licensing applications would be assessed, how the exceptions for advocacy and education would operate, or when penalties and consent requirements would change. The immediate next development is Mulino’s announcement of the superannuation reforms.