Latest news with #KathrynShannon
Daily Mail
6 hours ago
- Business
- Daily Mail
Aussies face financial ruin over retirement funds collapse
Australians have lost their homes, their retirement, and their peace of mind as a wave of self-managed superannuation funds collapsed without warning. Canberra couple Simon and Annette Luck face selling their house after losing almost every cent of their $340,000 nest egg. Perth nurse Kathryn Shannon saw her entire $460,000 life savings disappear overnight. They are among more than 12,000 ordinary investors left devastated after three major superannuation schemes - First Guardian Master Fund, Shield Master Trust, and Australian Fiduciaries Limited - went under. Australia's superannuation savings are one of the nation's most valuable assets. The national pool of retirement savings is worth more than $4.2trillion, which is second only to the $11trillion value of residential property. Super has been compulsory since 1992 and is now even more valuable than the $2.9trillion value of Australia's 500 biggest companies listed on the Australian Securities Exchange. Compulsory super contributions rose to 12 per cent as of July 1, making retirement savings the biggest asset for most Australians outside of their home. For many people who don't own property, superannuation is by far their biggest financial asset and is essential for a dignified retirement, with Australians unable to get the age pension until they turn 67. But the collapse of the First Guardian Master Fund, Shield Master Trust and now Australian Fiduciaries Limited has exposed the huge flaws of a system forcing people to put money aside for their retirement. Close to $1.2billion worth of super has conservatively been lost through these failed schemes, now all in liquidation after legal action from the Australian Securities and Investments Commission. More than 12,000 Australians, mainly with self-managed super funds, have been caught up in devastating collapses of managed investment schemes, which in two cases involved member funds being used to buy Lamborghinis for a fund director. Then there were instances of directors either buying mansions, fleeing overseas or sending money offshore. The victims include everyday Aussies like Simon and Annette (pictured), who lost $340,000 - almost all their retirement savings - after a now-banned financial adviser convinced them to invest with First Guardian Master Fund. They are contemplating selling their house, living out of a caravan and cancelling plans to visit relatives in The Netherlands and the UK. 'Disheartened, dismayed and downright disappointed and let down,' Annette tells me. Then there is Kathryn Shannon, who invested $460,000 with a fund linked to Australian Fiduciary Limited. 'I transferred all of my funds, totalling over $460,000 and representing nearly all my life savings as I don't own my own home,' she says. 'I feel ripped off and the superannuation system is not safe.' CoreData founder Andrew Inwood (pictured), a 30-year veteran of the financial services industry, tells me bad actors in the superannuation sector will always find ways to get around new laws. 'It's not people who are good actors who have made a mistake,' he says. 'It's bad actors who are setting out to deliberately exploit the system to take advantage of the fact that people will feel that they're missing out on some sort of return. Regulation doesn't change that: putting up more speeding signs doesn't stop people from speeding; what changes that is more cops on the street, more speeding cameras.' Royal Commission The 2019 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommended that hawking of superannuation products be banned. Former treasurer Josh Frydenberg set about implementing Justice Kenneth Hayne's 76 recommendations. But as Super Consumers Australia chief executive Xavier O'Halloran (pictured) tells me, it didn't stop financial advisers from selling their wares on Facebook, and preying on a fear of low super returns. 'We're seeing huge amounts of money flowing out in marketing costs - this seemed to be the business model of some of these managed investment schemes,' he says. 'They pump a huge amount of money into different promoter services, who put ads all over social media platforms encouraging people to switch their superannuation to a better fund - driving a lot of fear that people are perhaps in a really bad-performing fund and paying high fees and then switching people into what has been a failed investment.' While super funds and managed investment schemes can't directly advertise, financial advisers can continue to hawk their services and ultimately give bad advice. 'It's a pretty easy loophole to get around,' Mr O'Halloran says. This has made those with self-managed super funds particularly vulnerable to switching their retirement savings to a dodgy managed investment scheme. 'You've got someone who's trained as a financial adviser telling them that they're in a bad investment - naturally they're going to think about switching,' he says. 'We're really encouraging people who see these ads on social media really just to keep scrolling and not to be talking to these kind of promoters because it's a very risky business model and it's seen people lose their retirement savings. 'It's not as blatant as selling a bridge - "This is a good investment, take my word for it, it's a growth investment" - they use all the kind of words and jargon that you might hear from a pretty normal investment option at a superannuation fund.' Investors promised balanced investments also had their funds put into risky ventures. Spending on marketing Trailing commissions have been illegal since 2013, following the passage of Future of Financial Advice laws. But in the worst case, the $505million First Guardian Master Fund paid $40million in marketing fees to Cornerstone Strategic Management, Atlas Marketing and Indigo Group. A creditors' report by liquidator FTI Consulting revealed $446million may never be recovered. The collapse of First Guardian is leaving 6,000 Australians in limbo with First Guardian Master Fund's directors accused of moving $242million in funds offshore. David Anderson (pictured) in 2020 had bought a $9million Melbourne mansion while fellow director Simon Selimaj bought a $548,000 Lamborghini. ASIC, the corporate regulator, says that, since February 2022, at least 5,800 Australians have invested $480million with Shield Master Fund. Then there is the case of Australian Fiduciaries Limited, which collectively owes 600 investors $173million which liquidator Matthew Hudson, from SV Partners, tells me could grow closer to $200million. His creditors' report noted director Lee Rushton (pictured) had fled to Malaysia, and had a Lamborghini registered in his name. 'This is very similar to the First Guardian collapse,' Mr Hudson says. The government-run Compensation Scheme of Last Resort, established last year, can pay individuals up to $150,000 if they lose money when a financial company collapses. But the scheme has limited funding because it's paid for by finance companies via annual levies. Each year, the scheme can only pay out a total of $250million across all claims. Additionally, there's a cap of just $20million for each part of the finance industry, such as financial advice. This has led to serious shortfalls. For example, the scheme recently estimated it would need $70.1million just to compensate victims of bad financial advice. Mr Inwood says higher levies on financial advisers are likely to be needed to pay out the victims of collapsed managed investment schemes. 'They don't have the money so they are going to have to raise another $47,000 per adviser in Australia,' he says. In each case, the collapsed managed investment schemes were available on reputable superannuation platforms, giving investors a choice of potential funds, and were even given investment-grade ratings. 'There's a string of failures that has gone on here,' Mr O'Halloran says. 'Looking at how people ended up in these schemes in the first place is the really critical piece too. In some cases, superannuation funds had these managed investment schemes on their platforms, so basically sitting on their shelves of the supermarket were these toxic investments that people had been encouraged by these financial advisers to sign up to and put their retirement savings in. There's culpability all down the chain from the super funds to the adviser to the guys that were setting up these schemes and spending the money from them on Lamborghinis.'
News.com.au
10 hours ago
- Business
- News.com.au
Nurse loses almost $500k in savings after Australian Fiduciaries placed into liquidation
Experts have sounded the alarm after a Perth mum lost almost half a million dollars in life savings following the collapse of a superannuation fund. Western Australia nurse, Kathryn Shannon, had set up a self-managed super fund with Simple Super and transferred over $460,000 of hard-earned money over more than three decades. But its parent company, Australian Fiduciaries Limited (AFL), suddenly collapsed this year. The Australian Securities and Investments Commission sought asset preservation orders and appointed receivers to AFL through the Federal Court in June. Ms Shannon had made additional voluntary contributions throughout her working life to ensure she could comfortably retire, but she was left blindsided. 'I don't know how this could have happened. I never imagined I would face any difficulty with anything as simple as superannuation is supposed to be,' she said in an online post. 'I feel ripped off and the superannuation system is not safe. I am stressed about the uncertainty of my financial future. 'I now have doubt and fear about what my future will look like. Due to my age, the likelihood of earning enough to retire now is not possible.' Ms Shannon said she was left with many questions. She has flagged her case with the Australian Financial Complaints Authority, claiming she had been given inappropriate and incorrect information and advice. Financial adviser and founder of Pivot Wealth, Ben Nash, said while it is appealing to manage your own super fund, it can also be a trap. 'The biggest risk is that people don't fully understand what they're getting into,' he told 'You're not just choosing investments. You're running a regulated fund, with all the legal, tax, and compliance obligations that come with it. 'The risk isn't just poor investment returns. It's picking dud assets (like high-risk property schemes or private investments), failing to meet your compliance obligations, or putting your trust in the wrong hands – like in this case. 'If the trustee or platform fails, you wear the consequences. There's no government guarantee, and compensation is limited.' Fellow financial adviser and director of independent Wealth Advice, Andy Darroch, told it was similar to swimming at a beach. 'If you're in an SMSF, you might not just be swimming outside the flags, but you might be swimming on an unpatrolled beach, and crucially, you might not realise this,' he said. 'It doesn't mean you'll get into trouble, but if you do, you might not have the assistance you would have if you were between the flags on a patrolled beach, which I would say is an industry super fund.' MORE: 'Kiss your pension goodbye': Radical plan to remove Boomers Mr Nash stressed self-managed funds are not for everyone. 'SMSFs are often sold on the dream of control, flexibility, or lower fees – but the reality is more complex and far less forgiving. Unless you have at least $500,000 in super, a well-thought-out investment strategy, and a strong reason to DIY (like holding property or private investments through the fund), an SMSF is usually more admin and risk than it's worth,' the Pivot Wealth founder said. Mr Darroch agreed with his counterpart's remarks. 'You're taking higher risks, personal obligations, costs to your time and money and in exchange for this you get far worse investments than what you can get in a vastly superior, significantly cheaper and enormously less risky industry fund super fund,' he said. 'More risk, more cost, more time and a worse super fund, that's not a deal I'd recommend for anyone, regardless of balance or age.' Ms Shannon's post received dozens of comments which offered little sympathy. 'Unfortunately this is best example of someone wants SMSF without being aware of risks involved. Good faith is nice to have but doesn't help. Risk awareness is important,' one wrote. 'You do understand you made a choice to invest or put your super in them? I think it's terrible what's happened but doubt the government will bail (you) out,' another added. has reached out to Ms Shannon for comment. It is understood some 600 Australian investors have been impacted, with about $160 million put into investment schemes offered by AFL since February 2020. AFL stopped distributing units in the schemes in September 2023. On August 8, Terry van der Velde and Matthew Hudson from SV partners were appointed as liquidators to AFL and more than a dozen other entities. A hearing on the case is set for September 4 in Brisbane.
Daily Mail
12 hours ago
- Business
- Daily Mail
As Aussies face financial ruin over retirement funds collapse, money experts tell STEPHEN JOHNSON the warning signs you can't afford to miss
Australians have lost their homes, their retirement, and their peace of mind as a wave of self-managed superannuation funds collapsed without warning. Canberra couple Simon and Annette Luck face selling their house after losing almost every cent of their $340,000 nest egg. Perth nurse Kathryn Shannon saw her entire $460,000 life savings disappear overnight.
Daily Mail
a day ago
- Business
- Daily Mail
Mum who worked as nurse for 36 years loses $460,000 in retirement fund collapse: 'The superannuation system is not safe'
A woman who worked as a nurse for 36 years has lost $460,000 in savings following the collapse of her super fund. Kathryn Shannon, from Perth, is now reconsidering her well-earned retirement after investing her life savings in the Simple Super Fund, via her self-managed super fund. The Australian Securities and Investments Commission in June sought a Federal Court order to appoint receivers to its parent company Australian Fiduciaries Limited. Now, 600 Australians are in limbo, having invested $160million in managed investment schemes offered by Australian Fiduciaries since February 2020, mainly through self-managed superannuation funds. Ms Shannon, who doesn't own her own home, had voluntarily topped up her super, and only took time out of work to give birth to her two children. 'I transferred all of my funds, totalling over $460,000 and representing nearly all my life savings as I don't own my own home,' she said. 'I don't know how this could have happened. I never imagined I would face any difficulty with anything as simple as superannuation is supposed to be. 'I feel ripped off and the superannuation system is not safe.' She said the collapse of her super fund was particularly bad for someone nearing retirement age, such as herself. 'I now have doubt and fear about what my future will look like,' she said. 'Due to my age, the likelihood of earning enough to retire now is not possible. 'I am overwhelmed that I may have lost all of my super funds. 'How could this happen and why did monitoring not pick this up earlier? 'There are so many unanswered questions.' Australian Fiduciaries had stopped distributing units in its schemes in September 2023. This was two months after Simple Super Fund had its Australian business number cancelled, ending its status as a tax office-regulated self-managed superannuation fund. ASIC is investigating Australian Fiduciaries for inadequately managing conflicts of interest and for deceptively convincing investors to park their money with its schemes. Terry van der Velde and Matthew Hudson from SV Partners were last month appointed as voluntary administrators. Ms Shannon filed a complaint with the Australian Financial Complaints Authority in July and fears she will be left penniless without federal government intervention. 'I fear that without the intervention of the federal government, neither I nor any of the other 600 or so 'retail investors' who entrusted their superannuation to AFL will get their money,' she said. Her uncertainty is occurring as 6,000 Australians grapple with losing their super-managed super funds that had been invested in the collapsed First Guardian Master Fund.
