ASIC warns consumers to beware of cold callers

ASIC has issued a warning to consumers to remain vigilant against high-pressure sales tactics and deceptive online advertisements used by certain cold-calling operations offering unsuitable superannuation switching advice. This type of high-pressure sale tactics has been a blight on the superannuation/financial services landscape since 2020 when ASIC first started taking action against various AFS licensees.

Following an extensive review, ASIC has uncovered a worrying trend where cold callers, after procuring personal details from third-party data brokers or through online baiting techniques (eg running competitions for prizes such as phones or gift cards or using certain online comparison websites), have been aggressively pushing consumers to switch their superannuation funds. These callers often have ties to a minority of financial advisers who then suggest moving the consumers' funds into superannuation products that carry hefty fees.

ASIC has expressed particular concern about these practices, noting that individuals aged between 25 to 50 - the primary targets of these operations - are at risk of significant retirement savings depletion. This may be due to either reduced super value owing to unsuitable investments, excessive fees, and/or other charges.

In addition, ASIC has also observed a substantial flow of super savings into high-risk property-managed investment schemes. These schemes are either channeled through super products offered by APRA-regulated funds or SMSFs, with subsequent kickbacks going to the cold-calling entities.

ASIC has reiterated its commitment to safeguarding consumers and urged financial advice licensees and superannuation trustees to intensify their efforts in rooting out the nefarious elements causing consumer detriment. It notes that it will continue to take appropriate action, including enforcement action, to deter cold calling.

For financial advice licensees, ASIC suggests that they improve their monitoring and supervisory systems to identify and address any concerning behaviours, ensuring their advisers are prioritising their client's best interests. It also expects super trustees to be proactive in preventing the erosion of superannuation balances and mandating the implementation of stringent systems to oversee the deduction of financial advice fees from member accounts.

In its ongoing efforts to combat these unscrupulous practices, ASIC has reviewed how trustees oversee advice fee charges and plans to publish a report detailing its key findings. In addition, to raise public awareness, it has launched a campaign advising consumers to hang up on cold callers and scroll past social media clickbait offers to compare and switch super funds.

ASIC notes that a typical super cold calling experience does involve receiving a statement of advice (SOA) prepared by a financial advice firm – often one that the cold caller has an existing arrangement with – it is usually “cookie cutter” advice that is expensive, unnecessary and does not consider a consumer’s individual needs, and may eventually leave individuals in a worse financial position. It reminds consumers that quality financial advice takes weeks, not days to prepare.

Consumers who believe they have received financial advice that was not appropriate for their circumstances can initiate a complaints process, which includes contacting the business before contacting AFCA (an independent complaints body). Consumers who believe they have been a part of a scam should report it to their super fund at the first instance, and also to Scam Watch and ASIC.