Netwealth to pay $100m to super members affected by First Guardian collapse
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More news: The Albanese government has welcomed action against Netwealth by the corporate and prudential regulator.
An announcement by Assistant Treasurer and Minister for Financial Services Daniel Mulino said the $100 million compensation will “ease the significant stress these members have been under since the collapse of the First Guardian Master Fund”.
Mulino noted Netwealth’s decision to withdraw its application for assistance from the Government under the Part 23 of the Superannuation Industry (Supervision) Act 1993.
What they said: “The work by these two regulators, which is continuing, will also ease pressure on the Compensation Scheme of Last Resort,” Mulino said.
“There are still many Australians who have lost funds through the collapses of the Shield and First Guardian Master Funds who are going through a distressing time.
“It is again a reminder of the need to undertake reform to try to prevent these collapses in the future. The Government will consult on options early next year and I encourage industry and individuals to take part in that important work.”
Netwealth shares rally despite $100m compensation payment
More news: Shares in Netwealth rallied as investors brushed off the expected $71 million impact on the company’s net profit after tax after it compensates $100 million to super members affected by First Guardian failures.
Netwealth shares were up 1.77% to $26.96 by 11:19am AEDT.
Netwealth compensation to impact NPAT by $71m
More news: Netwealth Group has flagged that its $100 million payment to compensate affected superannuation members invested in First Guardian will impact its net profit after tax by about $71 million.
The compensation will be funded through a mix of cash and debt.
It noted FY26 costs associated with First Guardian and related activities were not “expected to be material, and will be disclosed separately in our accounts”.
What they said: Netwealth chief executive and managing director Matt Heine said: “Netwealth remains of the belief that the losses suffered by affected members were primarily caused by the fraudulent conduct of various entities and individuals including, in particular the responsible entity of First Guardian, Falcon Capital”.
“We recognise that, it is important for us to review and further uplift our onboarding and monitoring processes in relation to the investment options we make available to our members.”
Netwealth to pay $100m to super members affected by First Guardian collapse
The news: The Australian Securities and Investments Commission (ASIC) is suing Netwealth Superannuation Services and Netwealth Investments over failures regarding the collapsed First Guardian Master Fund.
Netwealth has agreed to pay over $100 million in compensation to more than 1,000 Australians who invested their superannuation in First Guardian and has admitted it contravened the Corporations Act.
The context: The payments will be made by 30 January 2026 and are under a court-enforceable undertaking to ensure members are compensated 100% of the amounts they invested in First Guardian less any amounts withdrawn.
Due to the payment ASIC will not seek a pecuniary penalty, similar to Macquarie’s payment of $321 million to super members affected by Shield Master Trust failures.
Netwealth has admitted it failed to obtain and did not assess sufficient information about First Guardian, or made sufficient independent enquiries to understand or evaluate the investment risk.
Between 26 March 2021 and 28 December 2022, approximately $128.5 million was invested across the two First Guardian classes by 1,303 Netwealth members. There were 1,084 members still invested in First Guardian when Falcon Capital froze redemptions in May 2024, with member investments totalling approximately $100.6 million.
What they said: ASIC deputy chair Sarah Court said: “This is the fourth action we’ve taken against a superannuation trustee in relation to our ongoing First Guardian and Shield investigations, and follows ASIC securing the payment of $321 million to Shield investors by Macquarie”.
“ASIC now has 12 cases underway against 20 defendants and is continuing to investigate misconduct relating to Shield and First Guardian to hold those involved to account.”
The sources: ASIC media release, APRA media release, ASX, Treasury media release
