Netwealth has made a direct appeal to the Australian Government for financial support following the devastating collapse of the First Guardian Master Fund, which stripped 1,088 of its members of approximately $101 million in retirement savings.
The ASX-listed wealth manager confirmed Monday that its subsidiary, Netwealth Superannuation Services, lodged an application with Financial Services Minister Daniel Mulino on Friday seeking assistance to restore funds and compensate affected members.
The move marks a significant shift for the company, which has maintained throughout the crisis that it complied with all legal obligations when making First Guardian available on its platform.
A $1.2 Billion Scandal Rocks Australia’s Super Sector
The First Guardian collapse forms part of a broader scandal alongside the Shield Master Fund failure, with approximately 11,000 Australians collectively losing around $1.2 billion in retirement savings across both schemes.
Netwealth shares rose 1.07% to $32.17 in midday trade following the announcement, suggesting investors view the government aid application as a proactive step toward resolving the crisis.
Netwealth Group Ltd Share Price
The company explicitly stated it believes Falcon Capital Limited, the entity behind First Guardian, “engaged in fraudulent conduct” leading to losses. It added that other entities and individuals also contributed to the losses through fraudulent behaviour.
What Happened to First Guardian?
The Federal Court appointed liquidators Ross Blakeley and Paul Harlond of FTI Consulting to wind up Falcon Capital Limited and the First Guardian Master Fund in April 2025. Court-ordered asset freezes were imposed on multiple individuals connected to the scheme, including director David Anderson, financial advisers Ferras Merhi and Osama Saad.
Liquidators released a statutory report in July stating they cannot provide a revised estimated value of units in the fund. However, they believe the value would be “significantly less” than Falcon’s last determination and that some assets “may have been overstated” in the company’s accounts.
The investigation has expanded to examine the entire chain of entities involved:
- Platform providers (Netwealth, Equity Trustees, Diversa, Macquarie)
- Financial advisers who recommended the funds
- Research houses that rated the products
- Lead generators who targeted potential investors
- Managed investment scheme operators
Netwealth’s Timeline Raises Questions
Leaked emails reveal Netwealth implemented a “soft close” on First Guardian funds in January 2023 after the fund failed to meet the platform’s minimum 4-star rating requirement from SQM Research. The fund held only 3.75 stars, and there were also “issues with redemptions.”
Despite these early warning signs, Netwealth continued to host existing investments until Falcon suspended all withdrawals in May 2024. The platform has since suspended administration fees related to First Guardian holdings and withheld financial advice fees pending further information.
Industry Pressure Mounts as Macquarie Sets Precedent
Macquarie Bank has set a benchmark by agreeing to compensate approximately 3,000 Shield fund clients with a $321 million package, admitting it failed to place the fund on a heightened monitoring watch list. Members will receive 100% of their invested amount by September 30, 2025.
Super Consumers Australia criticised Netwealth and other platform trustees for not offering compensation, stating they “catastrophically failed” their members. The consumer advocacy group called on trustees to “take responsibility for the harm they have contributed to and do right by their members.”
ASIC is currently investigating Netwealth and Diversa Trustees while actively suing Equity Trustees for alleged due diligence failures, which EQT says it will fight in court.
Government Response and Regulatory Overhaul
Minister Mulino has written to both ASIC and the Australian Prudential Regulation Authority requesting they “identify any steps that can be taken to prevent a similar event happening again.” He specifically asked ASIC to review whether current financial resource requirements for managed investment scheme operators remain appropriate.
APRA published findings from a thematic review of superannuation platforms in October, highlighting “wide variability in practices” and setting out expectations for trustees to strengthen investment governance, particularly around onboarding new products and ongoing monitoring.
The collapse is expected to blow past the $20 million subsector cap for the Compensation Scheme of Last Resort, with financial advisers potentially footing the bill despite many having no connection to the fraudulent schemes.
What This Means for Investors
For Netwealth members affected by the collapse:
- The liquidation process is expected to extend beyond 12 months
- Any government assistance granted would be used to restore funds
- Members can lodge complaints with the Australian Financial Complaints Authority
- Administration fees on First Guardian investments remain suspended
- No action is currently required from members
The schemes attracted victims through sophisticated marketing that included targeted Facebook and Google advertising, offering “Free Super Health Checks” before call centre staff convinced investors to switch their superannuation to higher-performing alternatives.
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Investor Outlook
The Netwealth financial assistance application represents a critical juncture for Australia’s superannuation sector. Unlike Macquarie’s voluntary compensation package, Netwealth’s approach seeks government intervention to resolve what it characterises as losses from external fraud rather than platform failures.
The company maintains it has the resources to meet any legal or monetary obligations should claims be established against it, though it continues to assert full compliance with relevant laws.
Industry observers are watching closely to see whether the government will establish a precedent for taxpayer-funded bailouts of super platform losses, or whether it will require platforms to bear responsibility for investment menu oversight failures.
The coming months will prove decisive as liquidators continue asset recovery efforts, ASIC’s investigations progress, and Minister Mulino decides whether to grant Netwealth’s unprecedented request for government support.
