Crackdown on 'Cowboys': Cbus Calls for End to Dodgy Super Sales Tactics

The construction industry super fund Cbus is urging a crackdown on what it describes as a "wild west" of dodgy marketers online who lure investors into switching into less regulated funds. In a submission to a federal Treasury consultation, Cbus argues that aggressive lead generators are using deceptive marketing tactics to push products under the guise of financial advice.

Key Issues:

• Deceptive Lead Generation: Online marketers use free "super health checks" and surveys to harvest personal details, promising early access to super balances.
• Product Pushing: These tactics are described as "product pushing masquerading as genuine financial advice." Cbus calls for banning these "cowboys" and cutting off the financial incentives that support them.
• Regulatory Gaps: Treasury documents note that lead generators are circumventing laws designed to ban cold-call sales, enacted after the Hayne royal commission. Some use clickbait ads to obtain broad consent for future contact, or refer consumers to financial advisers to fall within exemptions to hawking prohibitions.

Background: The issue gained urgency after the collapse of First Guardian and Shield investment schemes in 2024, costing nearly 12,000 investors almost $1 billion. Victims were often lured by lead generators who pressured them to switch savings into self-managed options or wealth platforms, funneling funds into the failed schemes.

Regulatory Response: ASIC has commenced legal action against Equity Trustees, alleging insufficient due diligence in allowing investments into First Guardian via its platform. Deputy ASIC chair Sarah Court stated there are over 26 matters under investigation or before the Federal Court, with further action expected.

What's Next: The Treasury consultation is exploring whether exemptions to anti-hawking laws should be tightened or removed entirely to protect consumers from aggressive marketing tactics.