00:00Basically, First Guardian and Shield were two superannuation funds that had roughly
00:07half a billion dollars in each of them that collapsed and were shut down over this year.
00:15ASIC, the corporate regulator, has been trying to recover as much money as possible for people
00:20who invested in these funds.
00:23NetWealth runs a superannuation platform through which people invested in the First Guardian
00:29Master Fund and for these more than a thousand investors who made their investment in First
00:35Guardian via NetWealth, they will be compensated in full.
00:40They will get 100% of the capital that they put in back, which is very good news, particularly
00:47ahead of Christmas and the New Year for these investors.
00:51It does mean that they lose any investment earnings that they would have expected to make,
00:58but at least they get the money they put in back.
01:01But it does only affect the people who invested through NetWealth.
01:05That is about $100 million of money that NetWealth is paying back to customers.
01:11The quid pro quo for NetWealth is that ASIC, the corporate regulator, is not pursuing penalties
01:18against the company despite finding that it failed in much of its due diligence around
01:24these funds.
01:25NetWealth has also reached a separate but related agreement with another key financial regulator.
01:31Yes.
01:32So the superannuation regulator, APRA, which regulates banks, super and insurance, has reached
01:38an enforceable undertaking with NetWealth related to these failures.
01:42And essentially the key failure is that NetWealth did not undertake sufficient due diligence about
01:48the funds that it was putting on its superannuation platform.
01:53So investors go to these platforms and they have what's called a menu of funds to choose
01:58from.
01:59First Guardian was one of the funds on NetWealth's menu.
02:05But NetWealth hadn't really checked about the bona fides of First Guardian.
02:09The risk levels of what First Guardian was investing in.
02:13And so it's made enforceable undertakings with APRA to bring in an independent expert to look
02:20at its risk management, its governance of which funds are allowed on its platform.
02:26It's going to review all the funds on its platform and see if they are indeed suitable
02:31for Australian superannuation savings to go into.
02:34And so, Michael, as we wind up the year, where are we at in terms of investors caught up
02:39with the First Guardian and Shield collapses being compensated?
02:43Yes.
02:44So we've seen today $100 million going back to more than 1,000 First Guardian investors
02:49from NetWealth.
02:50A few months ago, Macquarie, which also runs one of these superannuation platforms, stumped
02:56up $321 million to refund roughly 3,000 investors who'd invested in the Shield fund via its platform.
03:06But there are still two big superannuation platforms that are being taken to court by ASIC,
03:12where no settlement has yet been reached.
03:14That is Equity Trustees, where $160 million was invested via that platform into Shield,
03:21and Diversa, where around $300 million was invested in retirement savings, was invested
03:29in First Guardian.
03:30So investors that have gone via those platforms are still waiting to find out whether they'll
03:35be compensated, and they may have to wait some time yet with both of those companies indicating
03:41that they challenge the court action by ASIC.
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