Curbing lead generation activity

In the wake of the catastrophic consumer harm in the Shield and First Guardian disasters, the Super Members Council recommends a general ban on lead generation to make all consumers safer. In doing so, we draw a clear distinction between lead generation and safe, legitimate communications to a member – such as information about their super from their own super fund, or access to information about a workplace super fund provided by an employer/union. A ban on lead generation would be supported by:
— a licensee “reasonable steps” backstop (Consultation paper Option 1c) to close a workaround in which operators obtain an AFSL or CAR authorisation to evade the prohibition;
— mandatory consumer-initiated contact and a narrowed personal-advice exemption to hawking limited to existing clients (Consultation paper Options 2a and 2b together), to close both ends of the funnel;
— comprehensive remuneration reform capturing lead generators within the conflicted remuneration framework and narrowing the “benefit given by client” exemption so that fees deducted from a consumer’s super balance are no longer characterised as fees from the client (Consultation paper Options 3a and 3b, with 3b the single most important change);
— mandatory AFSL displayed on super advertisements and expanded ASIC stop-order powers with a “reasonably believes substantial consumer harm” threshold (Consultation paper Options 4a and 4b);
— principled reconciliation with DBFO Tranche 2, so that trustee nudges are a defined safe harbour with strict structural requirements and any communication failing those requirements falls into the prohibited activity; and
— matched enforcement resourcing for ASIC and integration with the CSLR sustainability reforms so the cost of harm sits with the actors who created it.