Netwealth has resolved to provide compensation to those members who were affected by the downfall of the Netwealth First Guardian Master Fund. The ruling was taken after the authorities involved took action against the investment firm because it was found that the firm had made a mistake in its risk assessments.
The members who were affected had invested through Netwealth’s superannuation platform and had to bear losses when the fund went down. The arrangement made for compensation guarantees that the affected members will get back all the amounts invested, minus any withdrawals.
The action is meant to bring back the member balances to the levels that existed before the investments were made. The regulatory agencies acknowledged the agreement as part of a legally binding undertaking.
Netwealth approves compensation after First Guardian risk assessment failures
How Many Members Are Impacted And What Is The Exposure?
About 1,088 members lost their money because of the Netwealth First Guardian Master Fund. The total amount of money that was linked to the collapsed fund is around $101 million.
Most of the investors who were affected had their exposure through superannuation accounts. The exposure was made known to the public after doubts were raised about the fund’s underlying assets.
The downfall revealed that there were weaknesses in the oversight processes that the investment platforms had. The huge losses caused the issue to be treated as a national regulatory concern.
Is Netwealth Seeking Government Assistance?
Netwealth has requested financial assistance as per the existing superannuation legislation. The request is to the government to provide Netwealth with help to cover the losses that were caused due to the alleged fraud.
This route is meant to safeguard the superannuation members in such rare occurrences. The result of the application is still pending.
Granting the request would ease the financial strain on the platform and the affected members. The request shows the gravity of the situation regarding the collapse and the strictness of the regulatory response.
Netwealth seeks government assistance under superannuation laws to cover fraud losses
Netwealth Acknowledges Governance And Risk Failures
Netwealth recognised its mistake of not properly judging the risk profile of the Netwealth First Guardian Master Fund among its shortcomings and chose to stop the fund offering before fixing the due diligence processes.
Regulators pointed out that Netwealth had adopted poor practices with respect to the supervision and monitoring of its operations. As an immediate measure, the company has pledged to bolster its corporate governance and risk management policies.
Hefty investments are required to upgrade these internal controls. Through these measures, Netwealth aims to ward off similar occurrences in the future.
What Does This Mean For Netwealth’s Financial Position?
The total bill for the compensation has been estimated at $101 million. Of this amount, approximately $71 million will be deducted from the company’s net profits after tax during the first half of FY26.
However, the impact of the bill has been stated not to affect the capital strength of the company. Netwealth has also indicated that the dividend guidance for FY26 has not changed.
Leadership is optimistic about the resilience of the underlying revenue and client inflows. The platform is still very popular with both advisers and investors who are actively engaging with it.
Compensation totals $101 million, reducing FY26 first-half profit by $71 million
Are Netwealth Fund Losses Clear To Members?
The compensation proposal has clarified the situation for a lot of investors, yet it has not answered all the questions. The question that investors keep on asking is ”Has Netwealth fund losses cleared?” as the issue is still not completely resolved.
The liquidation of the underlying fund is still in progress. The amount recovered from the failed fund is still very limited. The inquiry into the responsible entity is still going on.
Therefore, members still have to wait for the final word on the recoveries outside of the compensation package.
Also Read: Netwealth Breaks Silence with Government Aid Request After Members Lose $101 Million
FAQs
Q1: What compensation will affected members receive?
Members will receive 100% of invested amounts, excluding any prior withdrawals.
Q2: When will compensation payments be completed?
Payments are expected to be finalised by 30 January 2026.
Q3: Does the compensation affect Netwealth dividends?
Netwealth stated dividend guidance for FY26 remains unchanged.
Q4: Is the First Guardian investigation still ongoing?
Yes, regulatory investigations into related parties remain active.
Q5: Does The Compensation Cover Investment Earnings?
No, compensation only restores invested amounts, excluding any unrealised or expected returns.
Q6: Will Netwealth Change Its Investment Screening Process?
Yes, Netwealth has committed to strengthening due diligence and ongoing risk monitoring frameworks.
