Super Nation is a fortnightly column that examines, explains and analyses key issues in one of Australia's largest, fastest-growing and most important industries: superannuation.
From fully compensating investors for losses to alleging fraud and defending court proceedings over alleged due diligence failures, the range of responses from investment platform trustees to the collapse of two investment funds spans widely.
Irrespective of what they do and say, the trustees have been put on notice by Australia’s corporate and prudential regulators to lift their game to avoid a repeat of the First Guardian and Shield Master Fund’s failures, which cost members more than A$500 million.
In early October, the Australian Prudential Regulation Authority (APRA) wrote a letter to superannuation trustees calling on them to accelerate and escalate efforts to safeguard members’ investments held in platform products.
Noting a variation in practices across platform trustees, APRA called on all platform trustees to address weaknesses and accelerate efforts to lift standards.
APR Deputy Chair Margaret Cole said APRA would escalate supervision intensity to ensure that appropriate steps were being taken by trustees.
“We will not hesitate to take robust regulatory action as necessary,” Cole said in a media release.
Australians have invested $397 billion of superannuation via platforms, which is 13.1% cent of APRA-regulated superannuation fund assets and 28.1% of choice sector assets, and growing at around 14.5% in the 12 months to June 2025.
Court action
The letter was sent six weeks after the Australian Securities and Investments Commission (ASIC) announced it had launched proceedings in the Federal Court against Equity Trustees Superannuation, alleging due diligence failures in relation to Shield.
But ASIC had moved as far back as February to take action in relation to both funds by making interim stop orders on four product disclosure statements (PDSs) for classes of units of the Shield fund.
Although many parties could be involved in the distribution of products via platforms, trustees were accountable for determining if an investment was suitable and ensuring the platform supported good outcomes for members.
“Importantly, trustees cannot outsource accountability,” APRA said.
Where they stand
In the wake of the APRA letter, Azzet approached the major platform trustees with questions probing their response to the letter, including action to strengthen frameworks and practices, details of breaches of prudential standards and obligations and their understanding of the Financial Accountability Regime (FAR).
The FAR is a regulatory framework aimed at ensuring financial institutions act with honesty and integrity, clearly identifying who is responsible for key decisions and holding senior executives accountable for misconduct or poor governance.
Those sent questions included:
- BT Panorama, owned by Westpac (ASX: WBC)
- Insignia (ASX: IFL)
- Netwealth (ASX: NWL)
- Diversa, which is owned by Pacific Infrastructure Partners (PIP)
- Equity Trustees (ASX: EQT), and
- Macquarie Group (ASX: MQG) subsidiary Macquarie Investment Management Limited (MIML).
The responses were brief, cautious and in some cases generic, but nobody has been prepared to bite the bullet as much as Macquarie Group, the $85 billion financial services juggernaut, which agreed to compensate investors for A$321 million of losses arising from the Shield collapse.
Macquarie said it would repay the net capital invested in Shield through the Macquarie wrap platform, consistent with a court-enforceable undertaking to ASIC from MIML, which oversaw super investments in Shield by about 3,000 people.
“The approach of providing immediate certainty and an improved outcome for investors benefits all parties,” Macquarie said in a statement.
As a superannuation trustee, MIML oversaw $321 million in super investments into Shield by about 3,000 of its members between 2022 and 2023.
Macquarie on its own
A different approach is being adopted by the trustee for the other platform that offered Shield, Equity Trustees, which is defending proceedings launched by ASIC.
Equity Trustees is also being investigated by the corporate regulator for its role as the trustee for platforms offering First Guardian.
But the specialist trustee company, which is a fraction of the size of Macquarie with a market capitalisation of $627 million, welcomed APRA's letter and clarification of how some prudential standards should be applied in a platform context.
“Equity Trustees is committed to continuous improvement in all areas of governance, and we look forward to working collaboratively with regulators and the wider industry on strengthening policy to enhance investor protections and safeguards to prevent similar fraudulent activity in future,” the firm said in a statement to Azzet.
ASIC was also continuing to investigate Infrastructure Partners-owned Diversa and Equity Trustees over their roles as trustees for platforms offering First Guardian, and Netwealth, which offered the fund via its platform.
Diversa said it considered the First Guardian’s losses to have resulted from fraudulent conduct.
“The relevant conduct only came to light long after applications for and withdrawals from the First Guardian fund had been frozen,” Diversa said in a statement to Azzet.
A similar position was adopted by Netwealth, which is valued by the market at $7.76 billion and said it continued to work cooperatively with industry bodies and regulators in relation to members invested in the First Guardian funds via the Netwealth platform.
“Our position remains that the First Guardian matter is a case of fraud and that Netwealth has complied with all relevant legal obligations,” it said in a business update .
“We acknowledge that ASIC’s work is ongoing. Whilst it will take time for the relevant regulatory and legal processes to take their course, Netwealth’s response will be guided by its values and its customers.”
“Netwealth continues to explore all avenues available to assist our members in recovering some or all of their investments in First Guardian, while supporting members’ wellbeing.
“We remain active in communicating updates to our advisers and members.”
Adviser closed down
ASIC has also expanded legal action against former financial adviser Ferras Merhi, whose businesses allegedly advised clients to invest in Shield and First Guardian, securing interim orders restraining him from operating in the financial services industry.
They restrain Merhi from carrying on any business related to financial products or financial services, providing financial product advice, dealing in financial products, or marketing superannuation or managed investment scheme products.
The regulator has alleged Merhi engaged in unconscionable conduct, failed to act in the best interests of clients, gave conflicted advice, and provided defective statements of advice while receiving millions of dollars.
ASIC has also obtained orders for the appointment of a receiver to identify all of Merhi’s assets and liabilities. Mr Merhi’s assets have been frozen since February 2025.
He has been restrained from leaving Australia since July 2025.
