Retirement funds collapse leaving Australians distraught | Close of Business | ABC NEWS

Close of Business - Summary

Key Concepts:

• First Guardian & Shield Investment Funds Collapse
• Interpra's Role as Licensing Entity
• ASIC Investigations and Oversight
• Superannuation Platforms' Due Diligence
• Compensation Scheme of Last Resort
• National Climate Risk Assessment
• Emissions Reduction Targets
• Carbon Pricing
• ANZ Misconduct & Penalties
• US Federal Reserve Board & Interest Rates
• Contested Wills & Estate Planning

First Guardian and Shield Investment Funds Collapse

• Thousands of investors are demanding answers over a missing billion dollars due to the collapse of First Guardian and Shield Investment Funds.
• Mel Wallers almost took her own life after potentially losing her retirement savings of $370,000.
• She was lured by telemarketers and advised by United Global Capital to move her money from Host Plus into a self-managed option, which was then invested in First Guardian.
• Directors of First Guardian are accused of using investor funds for personal expenses like fast cars and mortgages.
• 12,000 Australians have lost their savings due to the collapse of these two schemes.
• ASIC has 25 active investigations into parties linked to First Guardian and Shield.
• 6,000 First Guardian investors are owed $445 million, and 5,800 Shield investors face losses of up to $480 million.
• 140 licensed financial advisors are being examined by ASIC.
• ASIC was warned about issues with First Guardian's management as early as January 2021.
• Both funds were accessible through superannuation platforms like Macquarie, Diversa, Net Wealth, and Equity Trustees (which ASIC is now suing).
• Gary Prince, 62, stands to lose almost $700,000 of his superannuation after being convinced by telemarketers to use United Global Capital.
• Dylan Greenway is helping investors lodge cases with the Australian Financial Complaints Authority (AFCA).
• Some statements of advice promised investors a 15% return in perpetuity.
• Liquidators found that hundreds of millions of dollars from First Guardian were sent offshore.
• The Compensation Scheme of Last Resort (CSLR) offers up to $150,000 per person.

Interpra's Role and Oversight:

• Interpra was the licensing entity for many financial planners who directed investors into First Guardian and Shield.
• Gary Croll, Interpra's managing director, was interviewed about the company's role.
• Interpra claims to have increased oversight when high volumes of clients were being brought in by firms like Venture Egg.
• Oversight included regular training and reviews of statements of advice.
• Croll stated that Interpra used research houses like SQM to assess products.
• A 3.75-star rating was considered an acceptable rating for First Guardian and Shield, despite their limited performance history.
• Interpra paused inflows into First Guardian and Shield in July 2023 due to discussions with ASIC.
• Interpra denies approving negative consent practices (assuming consent if no response is received within 7 days), but admitted to doing it on a one-off basis after the collapse.
• Ferris Murhey of Venture Egg declined to be interviewed but stated that all allegations of unlawful conduct will be defended in court.

ASIC's Defense and Actions:

• ASIC defends its actions, stating they didn't miss any red flags.
• They claim they were not put on notice about issues with the fund itself.
• ASIC is suing Equity Trustees.

Superannuation Platforms' Responsibility:

• The role of superannuation funds in putting these products on their platforms is questioned.
• The due diligence conducted by trustees is under scrutiny.

Climate Announcements and Economic Impact

• The National Climate Risk Assessment warns that a two-degree warming scenario by 2050 will cost the economy more than $800 billion.
• The Albanese government released emissions reduction targets of 62-70% by 2035.
• Tim Buckley, Director of Climate Energy Finance, discusses the implications.
• The target is considered insufficient by the scientific community but represents a significant increase in annual emissions reduction compared to previous decades.
• The government balances climate science with what is deemed achievable, considering public opinion influenced by misinformation.
• The cost of inaction on net zero by 2050 is estimated at $1.2 trillion, while the benefit of action is $2.2 trillion.
• Financial markets could solve the climate crisis with the right price signal, specifically a carbon price.
• Europe has a carbon price of €70, China $10, and Australia $20. Europe needs to double to $150 by 2035.
• A $150/ton carbon price would incentivize decarbonization and unlock unlimited capital.
• A carbon price would benefit Australia's resources export industry by enabling the export of green iron.
• BHP CEO Geraldine Slatterie indicated that BHP won't invest in green steel without a price on carbon.
• Dumping net zero would be "criminal intergenerational inequity" and relegate Australia to a third-world dig-and-ship economy.
• Australia could become a global exporter of green energy technology, reducing world emissions by 400 million tons per year by 2050 through green iron, ammonia, and aluminum.
• The focus should be on unlocking investment that decarbonizes exports and reduces scope 3 emissions.

ANZ Misconduct and Penalties

• ASIC has found evidence of misconduct by ANZ going back more than a decade.
• The misconduct includes misreporting bond trading data, ignoring hardship applications, and failing to refund fees charged to dead customers.
• ANZ faces a $240 million penalty, the highest ASIC has ever sought for unconscionable conduct and retail matters.
• ANZ misled customers about savings rates, affecting 194,000 accounts over 11 years.
• 26,900 customers didn't receive promotional rates they signed up for.
• The bank failed to refund fees to at least 18,900 deceased customers.
• ANZ failed to respond to 488 customers who applied for financial hardship, with some waiting over 2 years.
• ANZ misled the federal government after being hired to sell $14 billion of government debt, potentially costing the government $26 million.
• ANZ claimed the government suffered no financial loss and will repay any money earned.
• The bank used the penalty to justify 3,500 job losses.
• ASIC has brought 11 civil proceedings against ANZ since 2016, with penalties totaling over $310 million.
• Experts suggest executives' bonuses should be canceled and clawed back.

Market Update and US Federal Reserve

• The ASX 200 lost 1% for the week.
• Kyle Roder from capital.com discusses the market outlook.
• Donald Trump's pick for the US Federal Reserve Board, Steven Myron, advocates for big rate cuts.
• Myron's vote is seen as a barometer for future policy and a proxy for the White House's intentions.
• Myron advocated for a policy rate below 3% next year, which is well into stimulatory territory.
• The Fed indicated it is likely to cut interest rates twice more this year.
• Tech earnings have been strong, and volatility is suppressed.
• The US dollar is down 10% this year due to the end of US exceptionalism, fears around institutional trust, and developments in Europe and Japan.

Contested Wills and Estate Planning

• Wills are increasingly contested due to rising property prices and share market highs.
• Tim Brigden's parents died without a legally binding will, leading to involvement of the New South Wales public trustee and guardian.
• Simone Hargreaves, a lawyer, notes an increase in people passing away intestate (without a will), with rates heading north of 60%.
• A legally binding will must be signed in front of two independent witnesses.
• Superannuation included in a will supersedes beneficiary nominations with the super fund.
• Estate planning lawyer Rowdy Johnson says wills must be kept up to date with changes to state-based laws.
• Online DIY wills are causing the most problems for families.
• Wills can be challenged in each state and territory.

Conclusion

The program covers a range of critical business and financial topics, from investment fund collapses and regulatory oversight to climate change economics and banking misconduct. It highlights the importance of due diligence, ethical conduct, and robust regulatory frameworks in protecting investors and ensuring a sustainable future. The discussion on contested wills underscores the need for proper estate planning to avoid disputes and ensure assets are distributed according to one's wishes.