A compelling four in five Australians on social media say they want the Government to take strong action to ban predatory social media advertisements which entice people to move their super into riskier products.
An Ideally survey of more than 1,000 people for the Super Members Council also found a shocking 45% of Australians surveyed said they had recently been exposed to these types of click bait ads on social media.
Disturbingly, almost two in three survey respondents – or 63% - were not aware that these types of ads were used to switch Australians out of their super funds into the collapsed Shield and First Guardian funds that led to 12,000 people losing $1.2 billion of their super savings.
The devastating Shield and First Guardian collapses were enabled by shocking gaps in current consumer protections. Those events show how aggressive lead generation practices, high pressure sales tactics and gaps in oversight can be used to funnel Australians out of safe, high-performing, low-cost, regulated super funds and into unsuitable or unsafe super products, losing their life savings and undermining public trust in super.
The survey underscores the serious risks of predatory clickbait practices, with more than 70% of people saying it was difficult to tell the difference between a scam and advertising from a reputable source.
It comes after recent Council analysis shows a sharp rise in younger, lower balance members being switched into potentially riskier and typically more expensive products – right at the same time as there has been an explosion in the type of clickbait social media ads at the centre of the Shield and First Guardian collapses.
These findings strongly reinforce the case for the Government’s comprehensive reform package to strengthen consumer protections across super and financial advice, including proposals to crack down on harmful lead generation, and lift the governance and accountability obligations for super platform trustees to the same standards as apply for major super funds.
The Council has long called for stronger consumer protections, including:
- Removing any conflicts of interest wherever they arise in the chain.
- Strengthening trustee and adviser oversight on super switching.
- Stronger super platform and product accountability.
- True like-for-like comparisons at the point of switching including all returns, advice fees and costs.
- A crackdown on aggressive selling tactics through social media ads and cold calls.
It’s also crucial the Government gets on with enacting its promised Delivering Better Financial Outcomes (DBFO) reforms and delivers them alongside a package of stronger consumer protections. These advice reforms are a key consumer safety protection, increasing access to advice and taking people out of the hands of lead generators on social media.
“These new insights show everyday Australians strongly want to see the Government take action to make super safer for everyone. They want them to truly raise the bar on minimum safety standards,” says the Council’s CEO Misha Schubert.
“This also highlights why the Government shouldn’t weaken or water down crucial safety reforms. Australians clearly get it: they know that complexity and weak accountability create grave dangers to people’s life savings and make further Shield and First Guardian-style collapses possible.”
About us:
The opinions above are those of the author in their capacity as spokesperson for Super Members Council of Australia (SMC). SMC, the authors and all other persons involved in the preparation of this information are thereby not giving legal, financial or professional advice for individual persons or organisations.
