More than 100 investors have joined a potential class action investigation led by Gordon Legal following the collapse of First Guardian and Shield Master Funds, which left thousands of people with hundreds of millions of dollars in losses. While some investors received partial capital reimbursements from platforms like Netwealth and Macquarie, legal representatives argue these payouts failed to account for compounding interest and lost retirement growth, leaving thousands of Australians with significantly diminished nest eggs.
Why are investors pursuing legal action after receiving payouts?
Although platforms like Netwealth and Macquarie have reimbursed portions of the lost capital, legal experts contend these payments are incomplete. James Naughton of Gordon Legal states that investors have not been compensated for the “opportunity cost” of their money being trapped in collapsed funds. Because these funds were intended for retirement, the lack of compounding interest means many investors have effectively lost years of growth. According to Mr. Naughton, the legal team is investigating claims for at least tens, and potentially hundreds, of millions of dollars in additional compensation.
The collapse of First Guardian and Shield involves a combined hundreds of millions of dollars in investor funds. While 6,000 investors were affected by First Guardian, another 5,800 were impacted by Shield.
What is the difference between an AFCA complaint and a class action?
Investors currently face a choice between two primary recovery pathways: the Australian Financial Complaints Authority (AFCA) or a class action lawsuit. Melinda Kee, who leads the investor advocacy group SOS Save Our Super, recommends the AFCA process because it is free for individuals and provides a formal determination. However, James Naughton argues that AFCA has limitations, particularly when the focus is on the role of the superannuation trustee rather than individual financial advisers. A class action aims to hold the platforms accountable for their due diligence responsibilities regarding the funds they host.
How do regulators view the shift to managed investment schemes?
Financial regulators have expressed growing concern regarding the trend of investors moving retirement savings into self-managed super funds and less-regulated managed investment schemes. This shift has contributed to a “cost blowout” in taxpayer-funded compensation schemes designed to protect victims of financial misconduct, including the fallout from the Dixon Advisory collapse. As investors like 55-year-old Natasha Langby—who lost tens of thousands in retirement savings—seek restitution, the debate continues over whether platforms bear the ultimate responsibility for the funds they promote to the public.
Investors who believe they were affected by the First Guardian or Shield collapses should document all correspondence with their super platforms and track the specific dates of their investments to assist in potential legal or regulatory filings.
Frequently Asked Questions
- Who is leading the potential class action? Gordon Legal, alongside Keily McCrosson, is investigating claims for investors who used platforms like Macquarie and Netwealth.
- Have the platforms commented on the potential lawsuit? Both Macquarie and Netwealth have declined to comment on the ongoing investigation.
- Is it free to lodge a complaint with AFCA? Yes, lodging a complaint through the Australian Financial Complaints Authority is a free process for individuals, though it can be time-consuming.
- How many people were affected by these collapses? Approximately thousands of people lost money across the First Guardian and Shield funds.
Are you an investor affected by the collapse of these funds? Share your thoughts in the comments below or contact our editorial team if you have further information regarding this developing story.