The Super Members Council (SMC) is calling on the government to tighten and extend anti-hawking laws to ban cold-calling operators attempting to sell financial services.
A cold-calling operation about superannuation switching was the Financial Services and Credit Panel’s (FSCP) first outcome for 2024 while the activity has also seen multiple advisers banned.
Last month, ASIC permanently banned Melbourne-based financial adviser Kudzanai Philip Dzawo from providing any financial services after he dishonestly attempted to induce clients to transfer their superannuation into a bank account he controlled by making false and misleading statements to the clients.
In June 2023, a Brisbane financial adviser was banned for five years after recommending his clients roll their superannuation into self-managed superannuation funds (SMSFs) and borrow to invest in residential property.
As more of these cases occur, the SMC – which represents Australia’s largest funds including AustralianSuper and Australian Retirement Trust – has urged for tighter legislation in response.
The industry body called for anti-hawking laws to be extended to ban a “small subset of financial advisers from using cold-calling businesses to get clients”.
These operations can include click-bait social media posts, cold-calls and pressure sales tactics to move Australians into a “dud” super fund that overcharges fees.
“Rip-off merchants exploit a hole in anti-hawking legislation – which bans the unsolicited selling of financial products – to secure exorbitant advice fees from unsuspecting consumers, often charged from their super account,” the statement explained.
According to SMC chief executive Misha Schubert, regulators would be “far more effective” if cold-calling to sell financial advice was banned by including financial services in anti-hawking laws.
“Reputable financial advisers do not rely on third-parties to cold-call Australians to sell their services and using cold-call lead generation for financial advice should be banned,” she said.
The SMC also urged Parliament to swiftly pass the financial advice legislation that requires super funds to check if the advice fees charged from a member’s account are legitimate.
“One of the ways these shonks can be caught is by super funds checking if advice fees are appropriate. To give the regulator the teeth it needs to end the rip-offs, anti-hawking legislation should be extended to also ban the unsolicited selling of financial services,” Schubert added.
With anti-hawking laws not covering the sale of advice, the current legal framework enables “dodgy advisers” to skirt this loophole to engage in cold-calling activity.
The small portion of “shonky” advisers using this method for lead generation is causing “reputational damage” to the wider advice profession, the SMC chief executive described.
“While the regulator does crack down on individual advisers offering inappropriate advice after using cold-calling lead generation, the practice of cold-call lead generation selling financial advice is not yet banned.”
WHEN I RETIRED A LOT OF GUY’S WERE STILL PRACTICING FORMS OF COLD CALLING. There nothing wrong with it as a way of establishing a client. just because one organization uses it in a suspect manner is no reason for it to be banned.
I did stop operation that way and it cost me a lot of future earnings and i have regretted it ever .
since.I probably retie with a 100k less because of it. i spent the previous years before licensing cold calling and had some fabulous clients. jg